NEW YORK: US natural gas futures fell about 2% to a two-month low on Thursday on a bigger-than-expected weekly storage build as output rose and the amount of gas flowing to liquefied natural gas (LNG) export plants dropped after Freeport LNG in Texas shut early this week for Hurricane Beryl.
Front-month gas futures for August delivery on the New York Mercantile Exchange fell 5 cents, or 2.25, to $2.279 per million British thermal units (mmBtu) at 11:10 a.m. EDT (1510 GMT), putting the contract on track for its lowest close since May 10 and keeping it in technically oversold territory for a third day.
The US Energy Information Administration (EIA) said energy firms added 65 billion cubic feet (bcf) of gas into storage during the week ended July 5.
That was more than the 55-bcf build analysts forecast in a Reuters poll and compares with an increase of 57 bcf in the same week last year and a five-year (2019-2023) average rise of 57 bcf for this time of year.
That build boosted the amount of gas in storage to around 19% above normal levels for this time of year.
Before the latest storage build, traders noted that injections were smaller than usual for eight weeks in a row because several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March.
Higher prices in April, May and June prompted some producers, including EQT and Chesapeake Energy, to return to the well pad. But with prices now down about 12% so far in July, energy traders say it will be interesting to see whether drillers will keep boosting output over the next month or two.
EQT is the nation’s biggest gas producer, and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy.
Even though power generators were burning near record amounts of gas to keep air conditioners humming during a brutal heat wave, those gas burns were slightly depressed because roughly 1.3 million homes and businesses were still without power in Texas on Thursday in the wake of Hurricane Beryl.
At its peak Beryl, which hit Texas on Monday, knocked out power to over 2.7 million customers.
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