The U.S. benchmark natural gas prices fell early on Friday but were set for the first weekly gain in four weeks as summer temperatures soar and injections into gas storage sites were smaller than expected in the latest reporting week.
As of 9:35 a.m. EDT, the front-month Henry Hub contract traded down by 1.49% at $2.715 per million British thermal units (MMBtu).
Working gas in storage saw a net increase of 41 billion cubic feet (Bcf) in the week to July 14, the EIA's Weekly Natural Gas Storage Report showed on Thursday. The net addition to inventories was lower compared with the five-year (2018-2022) average net injections of 45 Bcf and lower than the median estimate of analyst expectations of a 44 Bcf increase in inventories.
The smaller gas stocks build and forecasts for hot weather sent natural gas futures jumping by 6% on Thursday. Prices turned lower early on Friday but they were still on course to post a weekly gain, of around 7-8%, which would be the biggest weekly gain since the middle of June.
Last week, total U.S. consumption of natural gas rose by 5.4% (3.9 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights cited by the EIA in its Natural Gas Weekly Update. Natural gas consumed for power generation jumped by 8.5% week over week with above-average temperatures in Texas, the Southwest, and California in particular. In Texas, power demand hit a record amid a heatwave this week.
Weather forecasts suggest that U.S. natural gas demand will be high at least through July 26.
"High pressure will rule the southern, western, and eastern US w/highs of upper 80s to 110s, hottest California to Texas, but also with highs of mid-80s to 90s over the East Coast," according to NatGasWeather.com.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More