US natgas prices ease to 4-week low ahead of federal storage report

By Scott DiSavino

June 26 (Reuters) - U.S. natural gas futures eased about 1% to a four-week low on Thursday on rising output that should allow energy firms to keep injecting more gas into storage in coming weeks than usual for this time of year.

On their last day as the front-month, gas futures for July delivery NGc1 on the New York Mercantile Exchange were down 4.1 cents, or 1.2%, to $3.365 per million British thermal units (mmBtu) at 9:06 a.m. EDT (1306 GMT), putting the contract on track for its lowest close since May 28 for a second day in a row.

That also put the front-month down for a fifth day in a row for the first time since August 2024.

The August NGQ25 futures, which will soon be the front-month, were trading down about 0.9% to $3.54 per mmBtu.

Those price declines occurred ahead of a federal storage report that is expected to show energy firms injected more gas into storage for a 10th week in a row last week.

Analysts forecast energy firms added 88 billion cubic feet (bcf) of gas into storage during the week ended June 20.

That compares with an increase of 59 bcf during the same week last year and an average of 79 bcf over the past five years (2020-2024). EIA/GAS NGAS/POLL

Even though meteorologists forecast the weather will remain hotter than normal for at least the next two weeks, temperatures were not expected to return to the highs seen during this week's heat wave.

Tuesday was the hottest day in more than a decade for millions of residents across the U.S. Northeast, weather forecaster AccuWeather reported, noting temperatures in Philadelphia and Boston hit 100 degrees Fahrenheit (37.8 Celsius), while New York City broke the record high from an 1888 heat wave.

To escape that heat, homes and businesses cranked up their air conditioners, boosting power prices to their highest levels since January in some markets and stressing some regional power grids.

Even though power generators burn more gas during heat waves to produce electricity to keep those air conditioners humming, gas prices have dropped about 16% since hitting an 11-week high of around $4.15 per mmBtu on June 20.

And with futures for the rest of the summer trading well below last week's high, with July NGN25 at $3.35 per mmBtu and August NGQ25 at $3.53, some analysts have started to say the market may have already seen its highest price for the summer on June 20.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 105.5 billion cubic feet per day so far in June, up from 105.2 bcfd in May, but still below the monthly record high of 106.3 bcfd in March due primarily to normal spring pipeline maintenance earlier in the month.

With more high summer temperatures still to come, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 103.7 bcfd this week to 106.0 bcfd next week. The forecast for next week was higher than LSEG's outlook on Wednesday.

The average amount of gas flowing to the eight big U.S. LNG export plants has fallen to 14.1 bcfd so far in June, down from 15.0 bcfd in May and a monthly record high of 16.0 bcfd in April.