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(Reuters) – U.S. natural gas futures fell 1 percent to a more than one-week low on Thursday after the release of a federal report, which showed a weekly storage build that was slightly higher than expected.
Front-month gas futures fell 2.8 cents or 1 percent to $2.912 per million British thermal units at 11.30 a.m. EDT (1530 GMT). Prices touched a session low of $2.891, a bottom since Aug. 8.
The U.S. Energy Information Administration reported that utilities added 33 billion cubic feet (bcf) of gas into storage in the week of Aug. 10.
This compares with estimates of 31 bcf in a Reuters poll, increases of 49 bcf in the same week last year and a five-year average build of 56 bcf for the period. This was the sixth week in a row that injections were smaller than normal.
“I think the injection was a little bit on the higher side than some may have expected. Maybe a bit of letdown as it was not as bullish as some of the injections that we have seen in recent weeks,” said Daniel Myers, market analyst at Gelber & Associates in Houston.
“Even though this was a small increase and significantly lower than the five-year average, that was sort of what the market had anticipated based on the warm weather last week.”
The increase boosted stockpiles to 2.387 trillion cubic feet (tcf), leaving inventories about 20 percent below the five-year average of 2.982 tcf for this time of year and the lowest for the week since 2003.
Traders said overall futures volatility has remained relatively low since February, with prices supported by tight supplies but pressured by strong gas output. The amount of gas in storage is about 20 percent below the five-year (2013-2017) average while production is at record levels.
“A larger-than-expected build in U.S. gas inventories has brought the Henry Hub front-month futures price under some pressure,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
“Price gains will also be capped because of forecast for below-average temperatures in central U.S. over the coming week. Nevertheless, the country’s severely depleted gas stocks will remain a concern as we move towards the 2018-2019 gas withdrawal season.”
Production in the Lower 48 U.S. states averaged a record high 81.6 billion cubic feet per day (bcfd) over the past 30 days. Daily output rose to an all-time high of about 82.7 bcfd on Monday, according to Thomson Reuters data.
Analysts at Thomson Reuters forecast demand in the Lower 48 states for the forthcoming week at 79.8 bcfd, down from 81.7 bcfd for the current week and 81.2 bcfd in the previous week.
Reporting by Vijaykumar Vedala and Harshith Aranya in Bengaluru; Editing by Susan Thomas
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