US natural gas futures fell on Thursday on forecasts of lower cooling demand over the next two weeks as the peak summer season approaches its end, with prices further weighed down by record high production.
Front-month gas futures fell 1.1 cents, 0.5%, to settle at $2.159 per million British thermal units.
Prices fell after earlier gaining as much as 1% following the release of a federal report showing a higher-than-normal weekly storage build.
The US Energy Information Administration (EIA) said utilities added 59 billion cubic feet (bcf) of gas into storage during the week ended Aug. 16. That was mostly in line with a 60 bcf build that analysts forecast in a Reuters poll and higher than the five-year (2014-18) average build of 51 bcf for the period.
The increase last week boosted stockpiles to 2.797 trillion cubic feet (tcf), 3.6% below the five-year average, but still 15.2% above the same week a year ago.
"The storage deficit is expected to persist into the fall shoulder season, especially with next week's smaller injection that will include the peak of August heat and the return of stronger LNG demand," Daniel Myers, market analyst at Gelber & Associates in Houston, wrote in a note.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production expected to keep growing, analysts said, stockpiles should reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on October 31.
Gas production in the Lower 48 US states rose to 91.9 bcfd on Wednesday from 91.2 bcfd on Tuesday, Refinitiv data showed, close to the all-time high of 92.5 bcfd scaled on Monday.
"Production picked up and demand estimates are expected to fall in the next two weeks as we approach more fall-like weather Supply demand balance should be loosening in the next two weeks," said Robert DiDona of Energy Ventures Analysis.
Refinitiv data projected demand in the Lower 48 would fall to 88.2 bcfd next week from 91.8 bcfd this week. This compares with the 90.3 bcfd forecast the prior week.
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