US natural gas futures on Thursday edged higher after a report showing a close-to-expected storage build and mostly steady forecasts for warmer-than-normal weather over the next two weeks. The US Energy Information Administration said utilities added 62 billion cubic feet of gas into storage during the week ended September 9, nearly matching the consensus estimate for a build of 63 bcf from analysts in a Reuters poll.
That compared with injections of 36 bcf in the prior week, 74 bcf in the same week a year earlier and a five-year average build of 69 bcf. Front-month gas futures for October delivery on the New York Mercantile Exchange rose 3.8 cents, or 1.3 percent, to settle at $2.927 per million British thermal units.
With higher-than-normal temperatures expected through the end of September, power generators are projected to burn about 29.8 bcf per day during that time, according to Thomson Reuters data. That compares with 28.3 bcfd during the same period in 2015 and a five-year average of 22.0 bcfd, the data showed. Generators are burning much more gas than usual instead of coal because it is relatively cheap. Since the start of the year, physical gas at the Henry Hub benchmark in Louisiana has averaged $2.26 per mmBtu. That compared with an average of $2.61 in 2015, the lowest level since 1999. Earlier this week, however, next-day gas traded at over $3, its highest since May 2015.
Taking advantage of those relatively low prices, the power sector consumed a record 26.2 bcfd of gas last year, and so far was burning an even higher 28.2 bcfd this year, Thomson Reuters data showed. Production in the lower 48 US states, meanwhile, was expected to ease to 69.6 bcfd due in part to pipeline maintenance curtailments on Thursday, its lowest level since July. That would compare with an average output over the past 30 days of 72.5 bcfd and a record annual high of 73.3 bcfd for all of 2015, according to Thomson Reuters data.
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