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US Natural Gas Update: Prices Rise on Warm Forecasts Ahead of Storage Data

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US natural gas futures extended gains in after-hours trading on Wednesday as forecasts for hotter weather lifted cooling demand expectations and analysts predicted a smaller-than-average storage build.

The front-month Henry Hub contract and the continuous contract both gained 2.57% to $3.228 per million British thermal units.

The Wall Street Journal, citing a note from NatGasWeather.com, reported that US natural gas demand is expected to remain light to moderate through Saturday, then intensify as hotter weather spreads across the eastern two-thirds of the US. High temperatures are forecast to range from the upper 80s to above 100 degrees Fahrenheit, "including 90s for many major central and eastern U.S. cities from Chicago to Washington D.C."

Fundamental demand indicators remained mixed. Barchart, citing BNEF data, said total US natural gas demand on Wednesday was estimated at 72.3 billion cubic feet per day, down 13.7% from a year earlier.

Celsius Energy reported power-sector gas consumption, or powerburn, at 37.7 bcf on Tuesday, up 1.3 Bcf from the previous day but down 6.1 Bcf from the same day last year. Gelber & Associates put powerburn at 41.5 Bcf on Wednesday.

Gelber also said LNG demand remains an important structural support, with net LNG exports at 19.1 Bcf/d and market expectations still pointing to stronger export demand into July.

Market participants are now focused on weekly storage data due on Thursday from the US Energy Information Administration.

Barchart said expectations for a smaller-than-average storage build also supported prices on Wednesday. Market consensus calls for a 67 Bcf increase in EIA natural gas inventories for the week ended June 19, below the five-year average injection of 75 Bcf for the period. Gelber & Associates expects a 73 Bcf build.

The Wall Street Journal said analysts expect the EIA report to show a 70 Bcf injection, adding that such a build would reduce the storage surplus relative to the five-year average to 146 Bcf from 151 Bcf.

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