US natural gas futures eased on Friday as production slowly rises and on forecasts for steady, near-normal temperatures and cooling demand over the next two weeks. On their first day as the front-month, gas futures for September delivery fell 2.8 cents, or 0.9 percent, to settle at $2.941 per million British thermal units. That put the front-month down about 1 percent for the week after easing less than 1 percent n the prior week.
Meteorologists forecast temperatures during the month of August would be near normal after a warmer-than-average June and July. Thomson Reuters data projected US gas consumption would slide to 76.0 billion cubic feet per day (bcfd) next week from 78.2 bcfd this week as the weather moderates and air conditioning demand eases before edging up to 76.7 bcfd in two weeks when temperatures are expected to rise a bit.
US gas production in the lower 48 states climbed to an average of 71.9 bcfd over the past 30 days, up from 70.5 bcfd during the same period last year. That was still well short of the 73.7 bcfd during the same time in 2015 when output was at a record high. US exports were expected to average 8.3 bcfd this week, up 38 percent from a year earlier, the data showed. Analysts said utilities likely added 31 billion cubic feet of gas into storage during the week ending July 28, leaving inventories about 3 percent above normal for this time of year.
That compared with a 3 bcf withdrawal during the same week a year earlier and a five-year average build of 44 bcf. Analysts said utilities will likely stockpile just 1.7 trillion cubic feet of gas during the April-October injection season. Limiting fuel for storage are several factors, including relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer.
That build, which is far below the five-year average of 2.1 tcf, would put inventories at 3.8 tcf at the end of October and is less than the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. Meteorologists predicted this winter would be normally cold in December and January and warmer than normal in February after two years of warmer-than-usual weather during the snow season. Analysts said the combination of a cold winter and low inventories could cause prices to spike later this year.
But with inventories still over the five-year average for this time of year and production slowly rising, speculators have become less inclined over the past few months to keep their bullish bets on the winter near the record highs seen in May.