US natgas prices retreat on uptick in storage build, profit-taking

By Sherin Elizabeth Varghese

July 3 (Reuters) - U.S. natural gas futures slipped on Thursday after government data showed a slightly bigger-than-expected storage build, triggering some profit-taking as traders reacted to the steady pace of injections.

Front-month gas futures for August delivery NGc1 on the New York Mercantile Exchange (NYMEX) settled 7.9 cents, or 2.3% lower, at $3.41 per million British thermal units. Prices had gained as much as 2.5% earlier in the session.

The U.S. Energy Information Administration (EIA) said energy firms added 55 billion cubic feet (bcf) of gas into storage during the week ended June 27, marking the 11th week in a row injecting more gas into storage.

That was slightly higher than the 53-bcf build analysts forecast in a Reuters poll and compares with an increase of 35 bcf during the same week last year and an average increase of 61 bcf over the past five years (2020-2024). EIA/GAS NGAS/POLL

"It's probably just trader response to the buying we saw a little bit this morning in addition to the slightly larger than expected storage report," said Robert DiDona, president of Energy Ventures Analysis.

"So you're probably seeing a bit of profit-taking from sessions over the last day or two."

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 106.7 billion cubic feet per day so far in July, slightly up from 106.4 bcfd in June, when spring pipeline maintenance had temporarily curbed production.

LSEG estimated 237 total degree days over the next two weeks, compared with 206 estimated on Wednesday. It also forecast average gas demand in the Lower 48, including exports, increased to 106.6 billion cubic feet per day for the current week from 103.7 bcfd in the prior week.

The normal level for this time of year is 174 TDDs. Total degree days measure the number of degrees a day's average temperature is above or below 65 degrees Fahrenheit (18 degrees Celsius), to estimate demand to cool or heat homes and businesses.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 15.4 bcfd in July so far, up from 14.4 bcfd in June, but down from a monthly record high of 16.0 bcfd in April. The feedgas average for July was slightly up from June, as units at some LNG plants returned from maintenance reductions.

Meanwhile, the Iranian military loaded naval mines onto vessels in the Persian Gulf last month, a move that intensified concerns in Washington that Tehran was gearing up to blockade the Strait of Hormuz following Israel's strikes on sites across Iran, according to two U.S. officials.

"We don't think that the Strait of Hormuz will close, but if it does, about one-fifth of the world's LNG goes through there. So that would be very impactful to the market," said Ryan Parsons, senior analyst at energy consulting firm Gelber and Associates.

"Other things to look out for are LNG. We just had Sabine Pass come back from maintenance and so currently the market is exporting around 15 BCF per day and that should be heading towards all-time highs as we push into the end of this year."

Golden Pass LNG, which is owned by Exxon Mobil XOM.N and QatarEnergy, has asked U.S. regulators for permission to re-export liquefied natural gas from October 1, as the export plant nears production after previous delays.

The company said it plans to import an LNG cargo to cool down its Texas-based export facility, which is still under construction. Cooling down the plant is typically the final step before it begins producing LNG.

Dutch and British wholesale gas prices traded in a narrow range on Thursday due to stable supply from Norway and from liquefied natural gas, while demand from the power sector softened after the end of the heatwave. NG/EU

text_section_type="notes">For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal

For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

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