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US Natural Gas Update: Prices Ease Ahead of Inventory Data Despite Increased Cooling Demand

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US natural gas futures extended losses in midday trade on Wednesday, pressured by rising domestic output and expectations for a sizable weekly storage build, despite the arrival of a massive heatwave across a large swath of the country.

The front-month Henry Hub contract and the continuous contract each declined 2.11% to $3.206 per million British thermal units.

Slight shifts in weather models and supply strength pushed prices down. Aegis Hedging said prices weakened after forecasts turned slightly cooler, even as cooling degree days continued climbing to a seasonal peak near 15 CDDs.

NRG Energy reported that US gas demand rose week over week. It said Wednesday that consumption remained elevated, driven largely by power burn, which increased by 0.9 Bcf/d on the day as extreme heat across the Midwest and East lifted cooling demand.

On the supply side, NRG Energy said production slipped 0.8 Bcf/d to 106.2 Bcf/d on Wednesday. Aegis Hedging estimated a sharper daily decline of nearly 0.9 Bcf/d to 108.4 Bcf/d, while Trading Economics data showed Lower 48 production averaging 110.0 Bcf/d, up from 109.7 Bcf/d in May.

Attention is now turning to weekly storage data from the US Energy Information Administration. Analysts expect an 88 Bcf injection for the week ended June 26, NRG said. If realized, inventories would sit about 167 Bcf above the five-year average and 31 Bcf below year-ago levels. Trading Economics estimates stocks are tracking roughly 5.9% above normal seasonal levels.

On the export front, Trading Economics put average flows to major LNG export facilities at 17.4 Bcf/d in June, keeping outbound demand steady but not offsetting domestic supply strength.

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