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US Natural Gas Update: Prices Decline After Hitting Resistance Level

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US natural gas futures fell in after-hours trading on Friday after encountering strong technical resistance at the 200-day moving average, wiping out earlier gains, the Wall Street Journal reported.

Front-month Henry Hub natural gas futures and the continuous contract both settled down 0.37% at $3.273 per million British thermal units.

Earlier in the session, prices climbed to their highest level for nearest-futures contracts in about 2-1/2 months, supported by forecasts for above-normal US temperatures next month that could increase electricity demand for air conditioning and boost gas-fired power generation demand.

Barchart, citing data from forecaster Vaisala, said above-average temperatures are expected across much of the northern two-thirds of the US between Jun. 8-12.

Support from Thursday's government storage report also helped underpin prices earlier in the day. The US Energy Information Administration said utilities injected 92 billion cubic feet of gas into storage in the week ended May 22, below market expectations for a 95 Bcf to 96 Bcf build and under the 104 Bcf injection recorded in the same week a year earlier.

Total gas inventories rose to 2,483 billion cubic feet, about 0.9% above year-ago levels and 6.2% above the five-year seasonal average. The surplus to the five-year average narrowed to 144 Bcf from 149 Bcf the previous week.

Barchart, citing data from BNEF, said Lower 48 US gas demand on Friday was estimated at 67.7 Bcf per day, down 2.5 Bcf from the prior day and down 1.9% from a year earlier.

NRG Energy estimated gas consumption slipped to around 36 Bcf/d and could ease further toward 34 Bcf/d, reflecting weaker demand across Texas, the Midwest, and the Southeast. However, forecasts indicate a rebound to the upper-30 Bcf/d range over the next two weeks as temperatures rise.

Estimated net flows to US LNG export terminals were unchanged on Friday at 18.5 Bcf/d, but were up 2.1% from the previous week.

Meanwhile, Lower 48 dry gas production was estimated at 110.6 Bcf/d on Friday, up 200 million cubic feet per day from Thursday and 2.0% higher than a year earlier.

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