US natural gas futures rose over one percent after touching an over one-week low on Thursday as a government report revised its estimates for total inventories in storage at the end of the week of August 4. The US Energy Information Administration revised the storage figures by 9 billion cubic feet, bringing the total stocks at the end of the week to 3.029 tcf compared to the 3.038 tcf reported earlier.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 3.9 cents or 1.3 percent to settle at $2.929 per million British thermal units. Prices earlier hit a session low of $2.856, the weakest level for the contract since August 9. The US Department of Energy revised the total storage lower since June 30 as it reclassified working gas as base gas. So while the week-to-week change looks marginally bearish, this was a significant bullish revision, Tim Evans, Citi Futures' energy futures specialist, said in a note.
Utilities injected 53 billion cubic feet of gas into storage during the week ended August 11, according to the EIA data. That was above the 47 bcf that analysts forecast in a Reuters poll and compared with an injection of 23 bcf for the same week a year ago and a five-year average addition of 50 bcf. "The downward revision to working gas can be considered by some as bullish; however, reclassification between base and working gas often happens, and this does not really change fundamentals on the demand side," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.
A net gas drawdown in the South Central region, US gas stocks remaining below the level seen during the same week last year and anticipation of US gas stocks moving below the five-year average by the end of summer were the predominantly bullish factors, he added. 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.
Analysts have said utilities probably would stockpile just 1.7 trillion cubic feet of gas during the April-October injection season. 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. Meanwhile, temperatures over the next couple of weeks were seen hotter than usual, according to a European weather model.