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US Natural Gas Update: Prices Climb Nearly 7% on Small Storage Build, Hotter Forecasts

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US natural gas futures extended gains in after-hours trading on Thursday after government data showed a smaller-than-expected storage build and forecasts pointed to higher temperatures ahead.

The front-month Henry Hub contract and the continuous contract both rose 6.72% to $3.303 per million British thermal units.

The US Energy Information Administration said working gas in storage increased by 92 billion cubic feet for the week ended May 22, bringing inventories to 2,483 Bcf. The build came in slightly below analyst expectations of 93-98 Bcf and under the 104 Bcf injection seen in the same week a year earlier.

Stocks now stand 6.2% above the five-year average, narrowing from a 149 Bcf surplus the prior week to 144 Bcf. On a year-over-year basis, inventories are up about 0.9%.

Weather models added further support, with updated forecasts turning hotter. Commodity Weather Group data cited by Barchart indicate above-normal temperatures are expected across the West and Midwest from Jun. 2-11, raising expectations for higher power sector demand driven by air-conditioning load.

Electricity demand trends also remained firm. The Edison Electric Institute reported US electricity output rose 5.2% year over year to 81,890 GWh for the week ended May 23. Over the past 52 weeks, output increased 2.0% year over year to 4.34 million GWh.

Barchart, citing BNEF data, reported US dry gas production at 110.4 Bcf/d on Thursday, up 0.6 Bcf/d from the prior day and 2.6% higher year over year.

It said lower-48 demand was pegged at 70.2 Bcf/d, up 0.1 Bcf/d day over day and 2.1% higher year over year. Power burn slipped slightly to 24.9 Bcf, down 0.4 Bcf from the previous day but up 2.3 Bcf from a year earlier, according to Celsius Energy.

On the export side, estimated LNG feedgas flows to export terminals were 18.5 Bcf/d, down 0.1 Bcf/d day over day but up 2.2% week over week amid ongoing maintenance. EIA data showed LNG vessel loadings totaled 121 Bcf for the week ended Wednesday, down 7 Bcf from the prior week, with 32 vessels departing US ports, two fewer than the previous week.

Gelber & Associates said the market remains focused on whether tightening LNG demand can offset looser near-term storage fundamentals. LNG feedgas continues to provide structural support, with flows near recent highs and commissioning activity at Golden Pass gradually ramping higher. Mexican pipeline exports also remain elevated as seasonal cooling demand builds.

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