US natgas slips over 1% despite surprise storage draw, hotter forecasts
Aug 15 (Reuters) - U.S. natural gas futures settled lower on Thursday as prices saw retracement and on lower demand forecasts for next week than previously expected. The price decline came despite forecasts for hotter weather and a federal weekly report showing a surprise draw in inventories.
Front-month gas futures for September delivery on the New York Mercantile Exchange were down 2.2 cents, or about 1% lower, to settle at $2.197 per million British thermal units.
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"The market maybe is beginning to see some retracement, which is the kind of normal in an oscillation of a price cycle," said Thomas Saal, senior vice president for energy at StoneX Financial.
"The market reacted positively to the withdrawal today, but the level of gas in storage is still substantially high and that's the kind of the bearish background in all of this...I think it could be why we might have come off today," Saal added.
The U.S. Energy Information Administration (EIA) said utilities drew 6 billion cubic feet (bcf) of gas from inventories during the week ended Aug. 9.
That compared with an injection of 33 bcf during the same week a year ago and a five-year (2019-2023) average increase of 43 bcf for this time of year.
Analysts had projected that hotter-than-usual weather last week kept cooling demand high and allowed utilities to add a much smaller-than-usual 6 bcf of gas into storage, according to a Reuters poll.
"I think natural gas prices are still partially supported by the August heat in the near and short term. We are still expecting hotter-than-normal weather even at the 30-day horizon," said Zhu Zhen, managing consultant at C.H. Guernsey and Co in Oklahoma City.
"But the longer-term price movement is largely constrained by the large storage surplus against the five-year average and expected record storage level at the end of the injection season."
Financial firm LSEG estimated 227 cooling degree days (CDDs) over the next two weeks, slightly higher than the 224 CDDs estimated on Wednesday. The normal for this time of year is 186 CDDs.
LSEG forecast average gas demand in the Lower 48 U.S. states, including exports, to edge up from 105.5 billion cubic feet per day (bcfd) this week to 106.8 bcfd next week.
LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 102.5 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.
"Gas markets look to be tightly supplied this winter, while stalling US gas production and new-found LNG importers in Egypt and Brazil could be the final straw for a sustainable bullish momentum for buyers across Europe and Asia," Rabobank said in a note.
Dutch and British gas wholesale prices were largely flat but still near eight-month highs as well-filled storages balanced concerns over potential supply disruptions ahead of the winter season.
(Reporting by Anushree Mukherjee and Brijesh Patel in Bengaluru; editing by Jonathan Oatis and Aurora Ellis)