US natural gas prices fell more than 2% to around $2.66 per million British thermal units on Monday, trading near a three-month low as strong output and ample inventories outweighed weather-related demand. The latest EIA report showed that energy companies injected 36 billion cubic feet (bcf) of gas into storage in the week ended August 7, exceeding both market expectations of a 31 bcf build and the five-year average increase of 33 bcf.
Production in the Lower 48 states has averaged a record 111.3 billion cubic feet per day (bcfd) so far in August, up from 110.7 bcfd in July, keeping storage levels above their five-year seasonal average since March. Additional downward pressure on prices has come from slightly weaker export demand: gas flows to the nine major US LNG export facilities edged down to 17.1 bcfd in August from 17.2 bcfd in July, meaning less gas is being processed for export and more is remaining in the domestic market.
Even so, forecasts call for hotter-than-normal weather through the end of August, which is likely to boost gas-fired power generation as utilities ramp up output to meet elevated cooling demand.
