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Weekly US Natural Gas Prices Advance on Bullish Storage Data, LNG Feedgas Recovery

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US natural gas markets ended the week higher, supported by a lower-than-expected storage build and a rebound in liquefied natural gas export feedgas flows.

In the futures market, the Nymex front-month contract rose to $3.20 per million British thermal units, from $3.04/MMBtu on June 12.

Natural gas spot prices rose by $0.06/MMBtu to $3.32/MMBtu during the week ended June 17, from $3.26/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released Thursday.

Prices were mixed across major regional hubs, ranging from a $0.51/MMBtu decline at Algonquin Citygate to a $2.84/MMBtu increase at the Waha Hub, which turned positive for the first time since early February, according to Natural Gas Intelligence.

The gain at Waha was attributed to increased demand for space cooling in Southern California, with natural gas-fired generation in the state more than doubling, up 106% from the prior week.

US LNG feedgas flows, which had been under pressure in recent weeks due to spring maintenance at several leading LNG facilities, posted a strong recovery this week.

Throughout this week, flows averaged over 19 billion cubic feet per day, compared to 17 Bcf/d last week, and the 30-day moving average of 18.01 Bcf, according to the Bloomberg LNG Feedgas Model.

The net injection into storage for the week ended June 12 was 73 Bcf, down from 108 Bcf the prior week, bringing total gas inventories to 2,759 Bcf, according to EIA data.

The net build was significantly below forecasts for 82 Bcf in net injections for the week, but was in line with the five-year average for this period, at 73 Bcf, according to data compiled by Investing.com, providing a bullish signal for the markets.

All regions reported a net injection during the week, with inventories rising to 532 Bcf in the East and 638 Bcf in the Midwest, or 1% and 4% higher than their respective five-year averages.

At 2,759 Bcf, US working gas inventories were 29 Bcf, or 1% below the corresponding levels a year ago, while being 151 Bcf, or 6% above the five-year average for this period.

According to Pinebrook Energy Advisors, the current storage situation remains healthy heading into peak summer, while noting that the "tight underlying balance would become more important if significant heat starts showing up in the forecast."

Weather forecasts indicate above-normal temperatures across roughly two-thirds of the country from June 26 to July 2, according to the National Weather Service, a trend expected to boost cooling demand and gas-fired power generation.

A total of 36 LNG carriers departed US ports during the week, up from 34 the previous week, with a combined capacity of 133 Bcf, 4 Bcf higher than a week earlier.

Meanwhile, the US gas rig count increased by one from 121 the previous week to 122 in the week ending June 18, according to data from Baker Hughes (BKR) released Thursday. That compares with 111 gas rigs in operation in the US a year earlier.

The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by seven to 749 from 742 the previous week.

In international markets, European TTF gas prices averaged $15.11/MMBtu for the week ended June 17, $1.54/MMBtu lower than the previous week. Meanwhile, the Japan-Korea Marker averaged $17.66/MMBtu, about $1.19/MMBtu below the prior week.

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