US natural gas eases from 7-year high ahead of storage report

US natural gas futures slipped on Thursday, pressured by forecasts for slightly lower demand next week, as the market took a breather from its recent rally ahead of the US Energy Information Administration's (EIA) weekly storage report.

Robert DiDona of Energy Ventures Analysis said there has been a significant rally over the past two weeks and Thursday's move is a small profit-taking ahead of the storage number. If the data is looser than market expectations, prices would fall further. The EIA weekly storage report is due to be issued at 10:30 a.m. EDT on Thursday.

Front-month gas futures fell 11.2 cents, or 2.1%, to $5.348 per million British thermal units (mmBtu) by 9:39 a.m. EDT, pulling back from their highest close since February 2014 in the previous session.

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Analysts forecast US utilities added 76 billion cubic feet (bcf) of gas into storage during the week ended Sept. 10. That compares with a build of 86 bcf during the same week a year ago and a five-year (2016-2020) average injection of 79 bcf.

If correct, last week's injection would boost stockpiles to 2.999 trillion cubic feet (tcf), 7.4% below the five-year average of 3.237 tcf for this time of year.

DiDona added that while recent storms have caused a slight demand loss, to go along with seasonal hits to consumption, there is unlikely to be a significant paradigm shift in the recent upward trend of prices with global rates as elevated as they are.

Much of that expected demand decline came from the shutdown of the Freeport LNG export plant in Texas during Tropical Storm Nicholas on Tuesday and upcoming planned maintenance at Berkshire Hathaway Energy's Cove Point LNG export plant in Maryland that should start early next week.

Refinitiv said Freeport was still scheduled to take in about 0.2 billion cubic feet per day (bcfd) on Thursday, up from 0.05 bcfd on Wednesday. That, is down from an average of 1.8 bcfd pulled in over the past 30 days. Freeport said on Wednesday the plant remains offline while the local power company makes repairs to its system.

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Despite the Freeport outage, the amount of gas flowing to US LNG export plants has averaged 10.5 billion cubic feet per day (bcfd) so far in September, matching 10.5 bcfd in August, as buyers around the world keep purchasing all the super-chilled gas the United States can produce. That compares with a monthly record of 11.5 bcfd in April.

Gas in Europe and Asia traded near $23 and $26 per mmBtu, respectively, compared with just over $5 for the US fuel. Gas at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, has hit record highs this week.

Refinitiv projected average US gas demand, including exports, would fall from 86.6 bcfd this week to 85.3 bcfd next week as LNG exports decline. Those forecasts were slightly higher than Refinitiv expected on Wednesday.

As of Wednesday, about 0.9 bcfd, or 39%, of gas production in the US Gulf of Mexico remains shut in since Ida, according to government data.