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US Natural Gas Update: Prices Fall on Supply Concerns

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US natural gas prices reversed earlier gains in after-hours trading to finish lower on Friday, as ample supplies outweighed bullish sentiment sparked by forecasts for hotter weather in the second half of August.

The front-month Henry Hub contract and the continuous contract both fell 0.44% to $2.715 per million British thermal units.

Lingering heat across Texas and the Southeast is expected to keep cooling demand elevated through the second half of August, but the strongest temperature anomalies are increasingly shifting away from major population centers in the Midwest and Northeast, according to Pinebrook Energy Advisors' Guide.

Aegis Hedging said the Midcontinent Independent System Operator issued a hot-weather alert for its South Region, covering southeastern Texas, Louisiana and parts of Arkansas and Mississippi. The advisory is effective through Aug. 16.

Any increase in demand from the southern US, however, is expected to be readily met as supplies remain robust.

The US Energy Information Administration said on Thursday that natural gas storage inventories had risen to their highest level in 10 years, nearly 200 billion cubic feet, or 6.7%, above the five-year seasonal average following a larger-than-expected 36 Bcf weekly injection.

Domestic production has also shown renewed signs of growth, with recent daily estimates approaching 113 Bcf/d.

Energy Transfer (ET) recently said it expects its Hugh Brinson pipeline to operate at full capacity of 1.5 Bcf/d by September, allowing more gas to flow from the Permian Basin to the Henry Hub in Louisiana.

With production strengthening and inventories well above seasonal norms, the natural gas market is expected to remain well supplied as the summer cooling season winds down.

Estimated gas flows to US LNG export terminals were around 18.1 Bcf/d on Friday, down 0.9% from the prior week, BNEF said.

A total of 31 LNG carriers departed US ports during the week, down four from the prior week, with combined capacity of 119 Bcf, down 16 Bcf from the previous week, the EIA reported.

G&A said LNG feedgas demand is forecast at around 19.9 Bcf/d on Saturday and above 20 Bcf/d through much of the two-week outlook, although scheduled pipeline maintenance at Corpus Christi could briefly interrupt that ramp-up next week.

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