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US Natural Gas Update: Prices Soften After Inventory Build

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US natural gas futures fell in midday trade on Thursday after government data showed a weekly storage injection broadly in line with market expectations.

The front-month Henry Hub contract and the continuous contract both fell 3.52% to trade at $2.715 per million British thermal units.

The US Energy Information Administration reported an injection of 16 billion cubic feet into Lower 48 natural gas storage inventories for the week ended Aug. 14, compared with analysts' expectations for a build of 13 Bcf to 16 Bcf.

Total inventories stood at 3,169 Bcf, down 28 Bcf, or 0.9%, from year-ago levels but 185 Bcf, or 6.2%, above the 2021-2025 average for the same week.

Pinebrook Energy Advisors noted that it was only the third week since the end of May in which the surplus relative to the five-year average did not widen.

The relatively small build underscored the impact of current heat and power-sector demand on injections, but inventories remain comfortably above the five-year average and are still projected to approach 4 Tcf by the end of the injection season, Gelber & Associates said.

A colder shift in weather forecasts added downward pressure to prices, G&A said. Forecasts removed 12 cooling degree days and cut 9.2 Bcf from the 14-day demand outlook, with power burn expected to retreat toward 42 Bcf per day to 43 Bcf/d as the shoulder season approaches.

Near-term heat, however, is expected to persist across the Southern US. Texas' ERCOT expects demand to exceed its 91.3 GW record this weekend as heat indexes approach 110 degrees Fahrenheit, RBC Capital Markets analysts said in a note on Wednesday.

Wind generation could also fall by as much as 5 GW per day, increasing pressure on natural gas, batteries and other resources to maintain grid reliability, the analysts said.

Average flows to the nine major US LNG export facilities were steady at 17.2 Bcf/d in August, slightly below June's record of 17.4 Bcf/d, Trading Economics said.

Natural gas production remained strong, but decreased 0.6 Bcf/d day over day to 107.8 Bcf/d, NRG Energy said.

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