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NEW YORK: US natural gas futures held near a seven-week low on Wednesday as the market waits for direction from what should be a bullish federal report expected to show last week’s storage build was smaller than usual for an eighth week in a row.

That lack of price movement came despite a bullish heat wave expected to linger over much of the country through at least mid—July and a bearish rise in output so far in July versus June and the tremendous oversupply of gas still in storage.

The heat wave should prompt power generators to continue burning lots of gas to produce electricity to keep air conditioners humming.

Traders said recent storage builds have been smaller than usual because several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March.

Higher prices in recent weeks, however, prompted some producers, including EQT and Chesapeake Energy, to return to the well pad.

Analysts forecast US utilities added 32 billion cubic feet (bcf) of gas into storage during the week ended June 28. That compares with an increase of 76 bcf in the same week last year and a five-year (2019-2023) average rise of 69 bcf for this time of year.

If correct, that will leave about 19% more gas in storage than normal at this time of year.

Front-month gas futures for August delivery on the New York Mercantile Exchange rose 0.8 cents, or 0.3%, to $2.443 per million British thermal units (mmBtu) at 8:45 a.m. EDT (1245 GMT). On Tuesday, the contract closed at its lowest since May 15 for a second day in a row.

Recent declines in the front-month caused futures for September, which usually trade at a discount to August, to jump to a record premium of around 2.9 cents per mmBtu over the August contract.

In the spot market, next-day gas prices at the Waha hub in West Texas plunged from a negative 52 cents per mmBtu for Tuesday to negative $2.06 for Wednesday as pipeline constraints trapped gas in the Permian Shale.

It was the fourth time in seven days that Waha prices fell into negative territory during the current heat wave and the 21st time so far this year.

Next-day Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six in 2020, none in 2021 or 2022, and once in 2023.

Financial firm LSEG said gas output in the Lower 48 US states rose to an average of 101.8 billion cubic feet per day (bcfd) so far in July.

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