US natural gas futures on Thursday edged lower on forecasts for weaker demand over the next two weeks despite a smaller-than-expected storage build and expectations for production to ease. The US Energy Information Administration said utilities added 49 billion cubic feet of gas into storage during the week ended September 23, the lowest build in at least six years.
That compared with injections of 52 bcf in the prior week, 99 bcf a year earlier and a five-year average build of 97 bcf. Front-month gas futures for November delivery on the New York Mercantile Exchange fell 4.3 cents, or 1.4 percent, to settle at $2.959 per million British thermal units. Both the US and European weather models continued to call for a little more cooling than heating demand over the next two weeks. But with the arrival of more autumn-like temperatures, gas usage was expected to be near its lowest since May.
That decline in demand pushed next-day gas in New York to 70 cents, its lowest level on record, according to data going back to 2001. Next-day gas at the Dominion South hub in western Pennsylvania in the Marcellus shale fell to 66 cents, its lowest since December.
Demand for gas in the lower 48 US states was expected to slide from 71.0 bcf per day on average last week to 66.8 bcfd this week and 63.6 bcfd next week, Thomson Reuters data showed. Demand includes US usage, liquefied natural gas exports and sales to Mexico.
Supplies, meanwhile, were expected to decline from 79.8 bcfd last week to 79.3 bcfd this week and 78.8 bcfd next week as US production eases, the Reuters data showed. Supplies include US production and imports from Canada.
Forecast demand over the next two weeks was close to the 30-year normal for this time of year despite much weaker heating demand than usual. That is because the power sector was still using much more of the fuel than usual to meet lingering air conditioning demand and the retirement of scores of coal plants over the past several years. Forecast power demand for the fuel over the next two weeks, however, was lower than during the same time last year as coal has remained cheaper to burn than gas for many generators for much of September.