US natural gas futures slip on falling demand

US natural gas futures slid on Wednesday amid production increases and forecasts for less cooling demand next week. Front-month gas futures fell 2.8 cents, or 0.9 percent, to settle at $3.094 per million British thermal units. Thomson Reuters projected US gas consumption would slide to 71.7 billion cubic feet per day next week from 72.5 bcfd this week.
The expected gas use over the next two weeks, however, was up from the 67.7 bcfd seen last week when Hurricane Irma knocked out power to millions in the US Southeast and brought cooler, wetter weather to much of the eastern half of the country. There were still about 84,000 customers without power in Florida on Wednesday morning.
Production in the lower 48 US states rose to an average 73.4 bcfd over the past 30 days, up from 71.2 bcfd a year earlier. That was far short of the 74.4 bcfd during the same period in 2015, when output was at a record high, Reuters data showed. US exports were expected to average 8.6 bcfd this week, up 65 percent from a year earlier, according to Reuters data.
Analysts said utilities likely added a bigger-than-usual 87 billion cubic feet of gas into storage during the week ended September 15, which would boost inventories to more than 2 percent above normal for this time of year. That compared with a 54 bcf increase during the same week a year ago and a five-year average rise of 73 bcf for that period. If correct, that would be the third week in a row that builds were bigger than usual. Even though stockpiles were around normal for this time of year, utilities were expected to add just 1.7 trillion cubic feet of gas during the April-October injection season because of relatively low output earlier in the year and rising sales abroad, analysts said.
The projected build, which is less than the five-year average of 2.1 tcf, would put inventories at around 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. Some analysts said gas prices could spike later this year if inventories remain low and the coming winter is colder than the last two snow seasons, which were among the warmest on record. In their latest forecasts, however, meteorologists predicted temperatures would be near normal in November and warmer than average in December, January and February.