US natural gas futures slipped to a two-week low on Thursday after a government report showed a bigger-than-expected weekly storage build. Traders noted that price decline came despite forecasts for cooler temperatures that will remain at above normal levels, which was expected to push heating demand up a bit over the next two weeks.
The US Energy Information Administration said utilities added 77 bcf of gas into storage during the week ended October 14, the lowest build for that week since 2012. That compared with injections of 79 bcf in the prior week, 87 bcf a year earlier and a five-year average build of 84 bcf. Front-month gas futures fell 2.9 cents, or 0.9 percent, to settle at $3.141 per million British thermal units, the lowest since October 6.
Thomson Reuters projected US gas usage would rise to 66.1 billion cubic feet per day this week and 68.0 bcfd next week from 65.7 bcfd last week as heating demand edges up. In addition, the expected return of the Sabine Pass liquefied natural gas export terminal will boost gas usage next week. Sabine Pass in Louisiana, which consumes about 1.3 bcfd, was expected to return from a four-week maintenance outage this week.
Since the start of October, US power demand has averaged 24.5 bcfd, below the record high 25.3 bcfd for the same period last year. Traders said gas usage was down because coal has been the cheaper fuel for many power generators since early September. Gas supplies were expected to ease to 76.2 bcfd this week from 77.1 bcfd last week amid low US production and fewer imports from Canada with the week-long maintenance shutdown of the Alliance pipeline in Canada.
The Alliance pipeline returned to service on Thursday, and gas supplies in the United States were expected to rise to 77.7 bcfd next week, Reuters data showed. US imports from Canada rose to 7.6 bcfd on Thursday from around 6.0 bcfd on average over the past week.
US production edged up over the past few days but has remained at the lowest since the end of September in part because of shut-ins in the Marcellus and Utica shale, where basis prices have held below $1 per mmBtu during that time. Traders said Northeast producers were waiting for winter whenn basis prices will be higher.
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