US natgas futures fall over 5pc to five-week low ahead of storage report

  • That price decline came ahead of a federal report expected to show a near-normal storage build last week.
  • The increase would bring stockpiles to 3.604 trillion cubic feet (tcf), 12.9% above the five-year average of 3.193 tcf for this time of year.
17 Sep, 2020

US natural gas futures fell over 5% to a five-week low on Thursday on expectations output would start to rise as producers return wells shut in for Hurricane Sally and on steady forecasts calling for lower cooling demand over the next two weeks.

That price decline came ahead of a federal report expected to show a near-normal storage build last week that will keep stockpiles on track to reach a record high by the end of October.

Analysts said US utilities injected 79 billion cubic feet (bcf) of gas into storage in the week ended Sept. 11. That compares with an increase of 82 bcf during the same week last year and a five-year (2015-19) average build of 77 bcf.

If correct, the increase would bring stockpiles to 3.604 trillion cubic feet (tcf), 12.9% above the five-year average of 3.193 tcf for this time of year.

Front-month gas futures fell 12.1 cents, or 5.3%, to $2.146 per million British thermal units at 9:34 a.m. EDT (1334 GMT). On Wednesday, the contract closed at its lowest since Aug. 13.

Data provider Refinitiv said output in the Lower 48 US states was on track to rise to 85.3 billion cubic feet per day (bcfd) on Thursday from a two-year low of 84.8 bcfd on Wednesday due to Sally-related shutdowns.

With cooler weather coming, Refinitiv projected demand, including exports, would fall from 85.3 bcfd this week to 81.9 bcfd next week.

The amount of gas flowing to US LNG export plants, meanwhile, averaged 5.4 bcfd so far in September. That was the most in a month since May and was up for a second month in a row for the first time since hitting a record 8.7 bcfd in February as global gas prices rise, making US gas more attractive.

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