US natural gas futures hold steady

US natural gas futures held steady on Thursday after a federal report showed last week's storage build was in line with analysts' estimates, despite forecasts for warmer weather and stronger cooling demand over the next two weeks. After briefly falling to a three-month low earlier in the day, front-month gas futures on the New York Mercantile Exchange closed down 0.8 cents at $2.652 per million British thermal units.
The US Energy Information Administration said utilities added 73 billion cubic feet of gas into storage during the week ended September 11, matching analysts' estimates in a Reuters poll. That compared with builds of 68 bcf in the previous week, 90 bcf a year earlier and a five-year average increase of 75 bcf. The latest Global Forecast System weather model predicted temperatures in the lower 48 US states would warm over the next two weeks, with population-weighted cooling degree days reaching 111 in that time.
That compared with a forecast 103 CDDs on Wednesday and a 30-year norm of 89 CDDs. Thomson Reuters Analytics projected average consumption in the lower 48 would edge up to 56.5 billion cubic feet per day over the next two weeks from a forecast 56.1 bcfd on Wednesday and a 30-year norm of 52.5 bcfd.
While residential, commercial and industrial customers used less gas than normal for this time of year, power generators continued to burn more of the fuel because it remains relatively cheaper than some forms of coal. Power generators were expected to use an average of 27.7 bcfd of gas over the next two weeks, up from a forecast 27.2 bcfd on Wednesday. That compared with the 30-year norm of 21.9 bcfd.
The gas futures premium over eastern coal held below $1 per mmBtu for the 23rd day in a row, the longest stretch since May. Traders said most generators would continue burning gas as long as the premium remains below $1.50 due to coal's higher environmental and transport costs. Gas production in the lower 48 was expected to ease to 73.3 bcfd on Thursday from 73.9 bcfd on Wednesday, according to Thomson Reuters Analytics. Net imports from Canada into the United States were expected to rise to 4.6 bcfd on Thursday from 4.3 bcfd on Wednesday, while US exports to Mexico would edge up to 3.2 bcfd from 2.9 bcfd.