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US Natural Gas Update: Futures Soften on Large Storage Build, Cooler Forecasts

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US natural gas futures extended losses Thursday, falling to a two-week low in after-hours trade after government data showed a larger-than-expected increase in domestic gas inventories.

The front-month Henry Hub contract and the continuous front-month benchmark each fell 3.14% to settle at $3.085 per million British thermal units.

The US Energy Information Administration reported a 108-billion-cubic-foot storage injection for the week ended June 5.

The build exceeded market expectations and the five-year average injection of 95 Bcf, widening the storage surplus relative to the five-year benchmark to 151 Bcf while leaving inventories roughly in line with year-earlier levels.

Pinebrook Energy Advisors said the injection was the largest weekly build of the season so far and suggested natural gas consumption was weaker than preliminary estimates had indicated, potentially reflecting stronger-than-expected wind and solar power generation.

They added that while Thursday and Friday are still projected to be the warmest days of the season so far on a population-weighted basis, forecasts indicate temperatures will return closer to seasonal norms after the near-term peak.

Barchart, citing The Commodity Weather Group, also said later forecasts were trending cooler, with below-average temperatures expected across the Upper Midwest through June 15.

Barchart, citing BNEF data, reported Lower 48 gas demand was estimated at 70.3 Bcf per day, down 2.3 Bcf from Wednesday but up 1.8% from the same period last year. Celsius Energy said power burn on late Thursday was 29 Bcf, up 1.9 Bcf from the day before and up 3.2 Bcf over year-ago levels.

The Edison Electric Institute reported Wednesday that US Lower 48 electricity generation for the week ended June 6 rose 2.13% from a year earlier to 83,866 gigawatt-hours. Electricity output over the 52 weeks ended June 6 increased 2.25% over the year to 4,341,775 GWh.

The Edison Electric Institute said Wednesday that US Lower 48 electricity generation rose 2.13% over the year to 83.9 terawatt-hours for the week ended June 6. Electricity output over the 52-week period increased 2.25% to 4,341.8 TWh.

On the supply side, BNEF data showed Lower 48 dry gas production was 111.3 Bcf/d on Thursday, up 2.2 Bcf from the previous day and 3.2% higher than a year earlier.

Estimated net flows to US LNG export terminals reached 18.7 Bcf/d on Thursday, up 0.1 Bcf from the prior day and 9.5% higher week over week.

Meanwhile, Cheniere Energy's (LNG) Corpus Christi LNG facility was on track to receive 2.61 Bcf/d of natural gas on Thursday after a temporary shutdown affected part of the plant, Reuters reported, citing LSEG data.

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