US natural gas futures edged lower on Tuesday as investors booked profits after prices failed to surpass a key technical level convincingly amid forecasts for hotter weather over the next two weeks that was expected to boost cooling demand. Front-month gas futures for September delivery on the New York Mercantile Exchange fell 2.4 cents or 0.8 percent to settle at $2.935 per million British thermal units. On Monday, prices hit a peak of $3.018, their highest since July 21.
"Profit-taking has induced some weakness in the Henry Hub front-month futures price, and technical resistance seen at $3/MMBtu also remains a headwind to the price," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London. "Nonetheless, forecasts for above-average temperatures for the rest of August in the US, together with persistent drawdowns of gas stocks in the country's South Central region, will provide additional support to the front-month price over the coming week."
US gas production in the lower 48 states increased to an average of 72.7 billion cubic feet per day over the past 30 days from 71.1 bcfd a year earlier. That was still far short of the 73.7 bcfd during the same time in 2015, when output was at a record, Reuters data showed. "The market is trading within lower half of (Monday's) range as short-term temperature views toward month's end are offering little price support," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
US natural gas futures fell nearly 1 percent on Monday on profit-taking after prices hit the $3 level for the first time in more than three weeks. Analysts said utilities likely added 51 billion cubic feet of gas into storage during the week ended August 11, putting inventories about 2 percent above normal for this time of year.
If correct, that increase would mark the first time since late June that weekly injections topped the five-year average for that period. Utilities injected 23 bcf during the same week last year and 50 bcf on average over the past five years. Analysts said utilities probably would stockpile just 1.7 trillion cubic feet of gas during the April-October injection season. Several factors, including relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer are limiting the quantities going into storage.
The projected build, which is below the five-year average of 2.1 tcf, would put inventories at 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. Thomson Reuters projected US gas consumption would rise to 78.2 billion cubic feet per day next week from 75 bcfd this week as the weather warms and air conditioning demand increases.