US natural gas futures fell on Tuesday as concerns about an impact to production from tropical storm Dorian took a back seat while output held near record peaks. A day before the contract expires, front-month gas futures for September delivery were down 2.8 cents, or 1.3%, to settle at $2.202 per million British thermal units.
On Monday, futures posted their best day in over a week as the market weighed the potential impact to output from Dorian. Residents of Barbados and other Caribbean islands braced for heavy rains as the storm churned west-northwest, and officials cautioned it could approach hurricane strength on Tuesday.
Analysts, however, said there was not enough confidence that Dorian was heading toward production regions.
"Everyone is looking at the weather models for the next two weeks, but there is no bullish factor there," said Robert DiDona of Energy Ventures Analysis. "Supply is holding steady and so is demand, so there's not much happening that's actually forcing tightening in the market. There is a little bit of profit taking from yesterday's session."
Refinitiv data projected demand in the Lower 48 states would remain unchanged at 87.6 billion cubic feet per day (bcfd) next week. This compares with the 91.7 bcfd forecast for the prior week.
Gas production in the Lower 48 US states rose to 92.4 billion cubic feet per day (bcfd) on Monday, Refinitiv data showed, near the all-time high of 92.5 bcfd scaled on last Monday.
Meanwhile, Enbridge Inc returned to service Line 25, one of two pipelines on its Texas Eastern natural gas system in Kentucky that was shut after an explosion on August 1.
Refinitiv data indicated 167 cooling degree days (CDDs) in the Lower 48 over the next two weeks. The normal is 153 CDDs for this time of year.
CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses.
Analysts said gas futures had traded near multiyear lows since May because record output and mild spring weather allowed utilities to inject huge amounts of gas into storage. The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019.
But with production expected to keep growing, analysts said, stockpiles should reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on October 31.