US natural gas futures little changed on warmer weather

US natural gas futures were little changed on Friday as rising production offset forecasts for warmer-than-normal weather and increasing cooling demand through mid-July. Front-month gas futures fell 0.7 cents, or 0.2 percent, to settle at $3.035 per million British thermal units. That put the contract up about 4 percent for the week but decline 1 percent for the month and 5 percent for the quarter.
US gas consumption was projected to rise as mounting temperatures boost air conditioning demand to 75.7 billion cubic feet per day next week and 79.1 bcfd in two weeks, from 70.2 bcfd during the relatively mild weather this week, according to Reuters data. Traders said demand next week would not be as high as it would normally be during hot weather because many businesses were expected to close for a long four-day weekend due to the US Fourth of July holiday on Tuesday.
US production, meanwhile, has climbed over the past few months, rising to an average of 71.6 bcfd over the past 30 days, compared with 70.8 bcfd a year earlier. But that was still less than the 73.3 bcfd average during the same period in 2015, when output was at a record high, Reuters data showed. US exports were expected to average 7.6 bcfd this week, up 41 percent from a year earlier, the data showed.
Analysts said utilities likely added 64 billion cubic feet of gas into storage during the week ended June 30, leaving inventories about 7 percent above normal for this time of year. That compared with a 38 bcf increase a year earlier and a five-year average build of 66 bcf. Meteorologists forecast temperatures in July would be slightly warmer than normal but not quite as hot as last year, prompting power generators to burn a little more gas than usual to meet cooling demand, though less than in 2016.
Temperatures in August are expected to be near their historic averages. Analysts forecast gas inventories will rise by only 1.6 trillion cubic feet during the April-through-October injection season because of relatively low output so far in 2017 and mounting sales abroad. The build, which is far below the five-year average of 2.1 tcf, would leave storage at just 3.7 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf.
After two unusually mild winters, traders say the possibility of low inventories and even normally cold weather during December through February could cause prices to spike late this year.