US natgas futures snap three-day losing streak after storage report

Power sector likely to boost US natgas usage as weather cools

US natgas futures snapped a three-day losing streak and edged higher on Thursday following a government report showing a weekly storage build that was slightly below estimates.

The U.S. Energy Information Administration said utilities added 54 billion cubic feet of gas into storage during the week ended on Oct. 28, pushing the total amount of fuel in stock to a record high of 3.963 trillion cubic feet at the end of the injection season. [EIA/GAS]

However, the weekly injection was just shy of the analysts’ consensus estimate of 56 bcf in a Reuters poll and smaller than builds of 73 bcf in the prior week and 58 bcf a year earlier, as well as the five-year average of 63 bcf.

Traders said expectations that the power sector would boost gas usage over the next two weeks now that the fuel was again cheaper than coal also helped stop a recent gas price collapse.

After falling about 10 percent over the past three days when some in the market have lost faith in a cold start to the winter, front-month gas futures for December delivery were up 2.9 cents, or 1 per cent, at $2.821 per million British thermal units at 10:59 a.m. EDT (1459 GMT).

Before the EIA released the storage report, the front-month was flat.

With temperatures expected to remain above-normal through at least mid-November, analysts said utilities would probably keep injecting gas into storage in coming weeks until inventories approach 4.1 tcf in mid November. [NGAS/POLL]

That would top the all-time high of 4.009 tcf set in November 2015.

Thomson Reuters projected U.S. gas usage would ease to 69.4 billion cubic feet per day this week from 70.0 bcfd last week on forecasts for less heating demand before jumping to 72.3 bcfd next week, when the weather was expected to turn cooler.

The power sector is likely to boost its usage of gas, which for most of the industry is now cheaper than coal, to an average of 23.7 bcfd over the next two weeks, up from estimates of 22.7 bcfd earlier in the week, according to Reuters data.

Gas supplies were forecast to ease to 77.6 bcfd this week and 77.7 bcfd next week from 78.4 bcfd last week on lower U.S. production and a decline in imports from Canada, Reuters data showed.

U.S. production averaged 69.7 bcfd over the past 30 days, its lowest since 2013.

(Reporting by Scott DiSavino Editing by W Simon)