US natgas slips to 3-week low on cooler forecasts, normal storage build

US natural gas futures pared earlier losses but remained on track for a three-week low on Thursday after last week's storage build was in line with estimates.

Prices were down earlier in the day on forecasts for cooler weather and less air conditioning demand next week than previously expected despite a continued increase in liquefied natural gas exports and record sales to Mexico.

The US Energy Information Administration (EIA) said US utilities injected 70 billion cubic feet (bcf) of gas into storage in the week ended Sept. 4.

That was close to the 68-bcf build analysts forecast in a Reuters poll and compares with an increase of 80 bcf during the same week last year and a five-year (2015-19) average build of 68 bcf.

Front-month gas futures fell 3.7 cents, or 1.5%, to $2.369 per million British thermal units at 10:36 a.m. EDT (1436 GMT), keeping the contract on track for its lowest close since Aug. 20.

Before EIA released the storage report, the front-month was down 3.2%.

Even though the weather is expected to turn cooler in mid-September, Refinitiv projected US demand would rise to an average of 85.4 billion cubic feet per day (bcfd) next week, from 84.0 bcfd this week, due to an increase in exports. That forecast for next week, however, is lower than Refinitiv's projection on Wednesday.

The amount of gas flowing to US LNG export terminals was on track to rise for a second month in a row in September for the first time since February as Cheniere Energy Inc's Sabine Pass plant in Louisiana ramps up after shutting in late August for Hurricane Laura.

Coronavirus demand destruction caused US LNG exports to drop every month from March to July when flows to plants fell to a 21-month low of 3.3 bcfd as buyers canceled cargoes.