US natural gas futures down two percent

US natural gas futures lost about 2 percent on Wednesday on expectations for another big storage build and weather forecasts calling for heat in the East and West to end over the next day or so. Front-month natural gas futures on the New York Mercantile Exchange closed down 9.8 cents, or 2.2 percent, at $4.357 per million British thermal units.
August NYMEX contract traded between $4.34 and $4.46 per mmBtu on Wednesday. The front month is now down about 2 percent for the week and up 4 percent for the year, according to Reuters data. After a record seven consecutive triple-digit injections, analysts forecast utilities added about 100 billion cubic feet of gas to storage last week. That is below the previous week's build of 110 bcf, but well above the 76-bcf build in the same week a year ago and the 68-bcf five-year average.
Total gas in storage was 1.829 trillion cubic feet, an 11-year low for late June. MDA Weather Services forecast the hot weather blanketing the US East and West would break over the next five days before more heat returns to both regions over the next six to 10 days.
For the next two weeks, US weather models forecast above-normal temperatures with 207 cooling degree days, just off 208 earlier on Wednesday, versus a normal 193 for this time of year, according to Thomson Reuters Analytics. On the NYMEX, the premium of the March 2015 contract over April 2015, the so-called widow-maker, dropped to 35 cents, the lowest since January, according to Reuters data.
The premium of the August 2014 NYMEX contract over September 2014 dropped to 0.8 cents, the lowest since November 2013. The premium of the NYMEX front-month gas contract over the front-month Appalachian coal contract slid to $1.80 per mmBtu from $1.89 on Tuesday, according to Reuters data. A gas premium higher than $2 makes it economical for utilities to burn coal.
Next-day gas at the Henry Hub, the benchmark US supply point in Louisiana, lost about 4 cents to average $4.39 per mmBtu on the IntercontinentalExchange, while New York lost 98 cents, or 23 percent, to $3.18. At the Chicago citygates, next-day gas lost about 4 cents to average $4.43, while the PG&E citygate lost 3 cents to $5. On the electricity front, next-day PJM West in the Mid-Atlantic fell $24, or 31 percent, to average $54 per megawatt hour.