NEW YORK: US natural gas futures slipped over 4% to a seven-week low on Friday, as rising output and ample gas supply in storage outweighed support from forecasts for higher demand over the next two weeks.

Front-month gas futures for August delivery on the New York Mercantile Exchange fell 9.5 cents, to settle at

$2.319 per million British thermal units (mmBtu). The contract was heading for its biggest weekly loss since mid-February, down 10.7%.

“Much of the price plunge of the past 3-1/2 weeks has related to an announced production increase by a major US producer that appears to have contributed to a lift in output that has overshadowed the weather factor that still appears tilted in a bullish direction,” energy advisory Ritterbusch and Associates said in a note. It did not identify the producer.

“A broad cool-down across a large chunk of the nation’s mid-continent appears to be weighing on spot pricing with an expected warmup later next week pushed to the sidelines so far as a price motivator.”

Financial company LSEG said gas output in the Lower 48 US states has risen to an average of 102.1 billion cubic feet per day (bcfd) in July.

That was up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May as many producers reduced drilling activities after prices fell to 3-1/2-year lows in February and March. US output hit a monthly record high of 105.5 bcfd in December 2023.

With hotter weather expected next week, LSEG forecasts gas demand in the Lower 48 states, including exports, to increase to 106.8 bcfd next week, from 105.9 bcfd this week.

Data from the US Energy Information Administration on Wednesday indicated utilities added 32 billion cubic feet (bcf) of gas into storage during the week ended June 28, in line with analysts’ forecasts in a Reuters poll. 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.

Gas stockpiles were now about 19% above normal for this time of year.

“As the air-conditioning load and the heat for July and August kick in, I think we should eventually see higher prices,” said Thomas Saal, senior vice president for energy at StoneX Financial.

The Electric Reliability Council of Texas (ERCOT), power-grid operator for most of the state, said peak demand this week will approach but not break the record for July as homes and businesses crank up their air conditioners to escape a heat wave.

Meanwhile, in Europe, gas prices were largely flat with a small rise in demand balanced by Norwegian gas flows, though uncertainty over supplies later in the year offered some support.