NEW YORK: US natural gas futures fell 3 percent on Friday as the weekly storage build sat well above the five-year average for the week despite missing analysts’ expectations.
Front-month gas futures for December delivery on the New York Mercantile Exchange traded 10.5 cents, or 3.1 percent, lower at USD3.24 per million British thermal units at 12:19 p.m. ET. The contract was on track for a third consecutive weekly gain and was up about 7.3 percent for the week.
“The storage number was definitely a bullish number, but the market’s reaction going the other way seems to suggest that the inside track of the market wasn’t that surprised,” Phil Flynn, senior analyst at Price Futures Group, said.
The US Energy Information Administration reported a 61-bcf storage build for the week ended November 6, below analyst expectations that had pointed to an injection of 66 bcf but above the five-year average for the week of 40 bcf.
A smaller-than-expected storage build is typically supportive for natural gas prices because it suggests tighter supply-demand balances.
“This market is drifting back down and is likely to stay within the boundaries of yesterday’s price parameters as this week winds down,” Ritterbusch and Associates said in a note. “Some of today’s pullback appears related to a lift in production and some softening in export activity during the past couple of sessions that had prompted much of the past week’s buying interest.”
Financial firm LSEG said average gas demand in the Lower 48 states, including exports, would fall from 121.7 bcfd this week to 121.0 bcfd next week.
Average gas flows to the nine major US LNG export plants fell to 18.1 bcfd so far in November, down from 18.5 bcfd in October.
LSEG said average gas output in the US Lower 48 states fell to 112.4 bcfd so far in November from 113.4 bcfd in October and the monthly record high of 115 bcfd in August.
Benchmark Dutch and British wholesale gas prices rose on Friday on Norwegian maintenance and as tanker attacks in the Strait of Hormuz dampened hopes for a resolution to the US-Iran war.