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US Natural Gas Update: Prices Strengthen as Forecasts Shift Warmer

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US natural gas futures edged higher in midday trading on Friday as warmer weather forecasts bolstered expectations for stronger cooling demand, offsetting pressure from a larger-than-expected storage build reported a day earlier.

The front-month Henry Hub contract and the continuous contract were both up 0.97% at $3.117 per million British thermal units.

Weather forecasts showed warmer-than-normal temperatures persisting through June 26, a development that could increase natural gas consumption by power generators as air-conditioning demand rises.

Power-sector demand remained the primary driver of prices, according to Gelber & Associates, which estimated power burn at 45.3 billion cubic feet per day.

Gelber & Associates analysts, however, said supply is still capping the upside. US gas production is holding at 110.3 Bcf/d, with forecasts indicating output will remain above 110 Bcf/d in the coming week, leaving enough supply to continue rebuilding inventories despite robust LNG demand.

LNG export trends were mixed. Trading Economics said average US LNG export flows eased to 16.5 Bcf/d in June from 17.1 Bcf/d in May due to maintenance work at facilities including Golden Pass LNG and Freeport LNG in Texas.

Gelber, however, noted that its weekly LNG demand outlook increased to 19.1 Bcf/d from 17.7 Bcf/d as maintenance at Freeport LNG was completed.

On Thursday, the US Energy Information Administration reported that utilities injected 108 Bcf of natural gas into storage during the week ended June 5.

The build exceeded market expectations of around 100 Bcf and the five-year average increase of 95 Bcf, although it was slightly below the 110 Bcf injection recorded during the same week last year.

The larger-than-expected inventory build underscored a relatively well-supplied market. Total gas in storage rose to 2.686 trillion cubic feet, about 6% above the five-year average.

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