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US Natural Gas Update: Large Inventory Build Pressures Price Down

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US natural gas futures fell in midday trading on Thursday after government data showed a larger-than-expected increase in storage inventories, offsetting support from rising power demand amid a widespread heatwave.

The front-month Henry Hub contract and the continuous contract were both down 0.71% at $3.197 per million British thermal units.

The US Energy Information Administration said working gas in underground storage rose by 87 billion cubic feet in the week ended June 27, exceeding market expectations for an 81-Bcf injection, according to Investing.com. The build also surpassed the five-year average increase of 64 Bcf.

Total working gas in storage reached 2,922 Bcf, about 23 Bcf below the year-earlier level but 175 Bcf above the five-year average of 2,747 Bcf.

Overall inventories are about 6.2% above the historical average and remain within the five-year range, the EIA said.

The larger-than-expected storage build weighed on prices despite strengthening cooling demand as high temperatures spread across much of the country.

NatGasWeather.com said a strong heatwave covering the eastern two-thirds of the US would lift national demand from high to very high over the next five days.

Temperatures in New York City reached and exceeded 100 degrees Fahrenheit, or 37.8 degrees Celsius, on Thursday.

Meteorologists expect above-normal temperatures to persist through mid-July, according to Trading Economics, supporting continued demand for gas-fired power generation.

On the supply side, US dry gas production remained steady. NRG estimated output at around 107 Bcf per day, while Trading Economics data showed production closer to 110 Bcf/d.

Feedgas deliveries to US LNG export terminals also held steady at about 18 Bcf/d, according to NRG.

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