US natural gas futures settled slightly lower on Tuesday as the psychological $3 mark provided a staunch resistance amid doubts over a widespread heating demand across the United States even though forecasts are for a cooler than normal weather over the next two weeks. Front-month gas futures fell 1.7 cents, or 0.6 percent, to settle at $2.974 per million British thermal units.
"This market is seeing a modest pullback as it continues to experience difficulty in sustaining price advances north of the $3 mark," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
"Although the short term 1-2 week temperature views have taken on a more bullish appearance with below normal patterns expected across the eastern half of the US, deviations from normal don't appear sufficient to crank up heating degree days appreciably."
Thomson Reuters forecast US gas consumption would jump to 82.8 billion cubic feet per day next week from this week's estimate of 72.5 bcfd as the weather turns seasonally cold. Analysts estimated utilities added a smaller-than-usual 62 billion cubic feet of gas into storage in the week to October 20, leaving total inventories about 1 percent below the five-year average for this time of year at around 3.7 trillion cubic feet.
That compares with a 74 bcf increase a year earlier and the five-year average build of 75 bcf for the period. Production in the lower 48 US states reached 74.9 bcfd earlier last week, its highest since September 2015, according to Reuters data. Over the past 30 days, output has averaged 73.7 bcfd, up from 69.8 bcfd a year earlier and in line with same time in 2015, when production was at a record high.
Output for October will top the monthly record set in April 2015, according to federal projections. Analysts estimated the total build for the April-October injection season at 1.7 trillion cubic feet, much less than the 2.1 tcf average for the past five years, in part because of low output earlier in the year and rising sales abroad.