US natural gas futures little changed on big storage build

US natural gas futures were trading within a few cents of unchanged after paring earlier gains following the release of a federal storage report showing a bigger than usual storage build that was in line with expectations.

Traders noted prices were little changed as forecasts for a little less cold weather than previously expected next week offset projections the cold in much of the country would linger through the first week of November.

The US Energy Information Administration (EIA) said utilities added a bigger-than-usual 87 billion cubic feet (bcf) of gas to storage during the week ended October 18.

That was in line with the 88-bcf build analysts forecast in a Reuters poll and compares with an injection of 62 bcf during the same week last year and a five-year (2014-18) average build of 73 bcf for the period.

The increase during the prior week ended Oct. 11 boosted total inventories over the five-year average for this time of year for the first time since September 2017.

The build for the week of Oct. 18 added to the surplus, increased inventories to 3.606 trillion cubic feet, 0.8% over the five-year average of 3.578 tcf.

The amount of gas in inventory was as much as 33% below the five-year average in March 2019. But with production close to a record high, analysts said stockpiles should end the summer injection season above normal levels at almost 3.8 tcf on October 31.

Front-month gas futures for November delivery on the New York Mercantile Exchange remained unchanged at $2.285 per million British thermal units at 10:42 am EDT (1442 GMT).

Before EIA released the storage report, the front-month was up 0.7%.

Over the next 6-10 days, the US National Weather Service (NWS) forecast temperatures in the Lower 48 US states would remain colder than normal over much of the country except for a strip along the East Coast. That cold will moderate as it moves east over the 8-14 day period, covering almost all of the country except the extreme Southeast, NWS said.

Refinitiv projected average gas demand in the Lower 48 states, including exports, would slide to 95.4 billion cubic feet per day (bcfd) next week, down from its forecast of 96.9 bcfd on Wednesday after meteorologists moderated their cold outlooks.

That compares with expected average demand of 86.9 bcfd for this week.

Gas flows to liquefied natural gas (LNG) export plants eased to 6.8 bcfd on Wednesday from 7.1 bcfd on Tuesday, according to Refinitiv data. That compares with an average of 6.7 bcfd last week and an all-time daily high of 7.2 bcfd on October 21.

Pipeline flows to Mexico held at 5.4 bcfd on Wednesday, the same as Tuesday, according to Refinitiv data. That compares with an average of 5.5 bcfd last week and an all-time daily high of 6.1 bcfd on September 18.

Gas production in the Lower 48 states edged up to 94.2 bcfd on Wednesday from 94.0 bcfd on Tuesday, according to Refinitiv data. That compares with an average of 93.8 bcfd last week and an all-time high of 94.4 bcfd on October 19.

In the spot market, next-day gas prices in West Texas are falling toward zero for the first time since August when Kinder Morgan Inc started filling a new pipeline that provided much-needed takeaway capacity from the Permian basin.