US natgas futures edge up on hot forecasts and lower output

US natural gas futures edged higher on Thursday on forecasts for the weather to remain hot and air conditioning demand high over the next two weeks, a slowdown in output and an increase in liquefied natural gas (LNG) exports.

That price increase came despite a report showing an expected, bigger-than-usual storage build last week when the weather was milder than now.

The US Energy Information Administration (EIA) said US utilities injected 58 billion cubic feet (bcf) of gas into storage in the week ended Aug. 7.

That was in line with the 57-bcf build analysts forecast in a Reuters poll and compares with an increase of 51 bcf during the same week last year and a five-year (2015-19) average build of 44 bcf.

Front-month gas futures rose 3.0 cents, or 1.4%, to settle at $2.182 per million British thermal units.

Although US and European gas contracts mostly trade on their own fundamentals, a 40% jump in prices at the European Title Transfer Facility (TTF) benchmark in the Netherlands so far in August helped pull US gas up about 21% this month. That made it profitable for more US LNG cargoes to go to Europe.

US LNG exports were on track to rise in August for the first time in six months. Pipeline gas flowing to the plants climbed to 4.2 billion cubic feet per day (bcfd) so far this month from a 21-month low of 3.3 bcfd in July.

With LNG exports rising and the weather expected to remain hot through the end of August, Refinitiv projected US demand, including exports, will average around 89.6 bcfd this week and next.

US output, meanwhile, is on track to fall about 1.8 bcfd to a two-week low of 87.8 bcfd over the past three days due mostly to maintenance work in West Virginia.