US natural gas futures fell 3.5 percent on Thursday after federal data showed weekly injections into storage within market expectations, amid forecasts for mild temperatures over the next fortnight. Front-month natural gas futures on the New York Mercantile Exchange settled down 7.5 cents, or 3.5 percent, to $2.08 per million British thermal units.
The US Energy Information Administration said utilities added 73 billion cubic feet into storage in the week ended April 22. Analysts polled by Reuters had estimated a 70 bcf build in inventories. Both the US and the European weather models predicted near-normal weather for the next two weeks, indicating muted heating and cooling demand for the period.
"Although this week's cool temperatures will likely preclude a similarly large injection next week, we still see a strong enough build to expand the surplus further," said Jim Ritterbusch of Chicago-based energy advisory firm Ritterbusch & Associates. With stockpiles at record highs after a warm winter, analysts said gas prices would have to remain low through 2016 to pressure output cuts and encourage power generators to keep burning gas instead of coal.
The US power sector has burned about 24.1 billion cubic feet a day so far this year, up from 22.9 bcfd a year earlier, according to Thomson Reuters Analytics. Power generators used record-high amounts of gas in 2015 and were expected to use even more this year, according to federal estimates. US drillers have cut dry gas output in the lower 48 states, producing 72.9 bcfd on average so far this year versus a record high of 73.5 bcfd for all of 2015. Thomson Reuters Analytics forecast the summer would be a little warmer than last year, with July about 14 percent warmer than the 30-year normal and August warmer by 8 percent. Meteorologists expect the upcoming hurricane season to be more active than a quiet 2015, but are mixed on whether there will be more storms than usual.
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