US natural gas futures rose on Thursday to hold near one month peak hit in the previous session on expectations for increased cooling demand due to warmer-than-normal weather, ahead of a weekly federal storage report. On its first day as the front-month, gas futures for October delivery rose 4.5 cents, or 2%, to $2.267 per million British thermal units at 9:31 a.m. EDT (1331 GMT).
Analysts said prices were being supported by lingering warmer weather conditions and some storm risk premium. "Even though (Hurricane) Dorian does not seem to be headed to the production area, the high season of the tropical storms is almost here and the market may be expecting more and stronger storms," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.
However gas price movement is expected to be flat or even slightly downward in the next couple of months due to the absence of major bullish events, Zhu added. Investors were keeping a close eye on Hurricane Dorian, which took aim at the Florida coast early on Thursday, whipped up by warm Atlantic waters as it threatened to become a dangerous Category 3 storm. Refinitiv data indicated 165 cooling degree days (CDDs) in the lower 48 states over the next two weeks. The normal is 147 CDDs for this time of year.
Meanwhile, gas production in the lower 48 US states fell to 90.8 billion cubic feet per day (bcfd) on Wednesday from 91.8 bcfd on Tuesday, Refinitiv data showed. This compares to an all-time high of 92.5 bcfd scaled on Aug. 19. Analysts forecast a near-normal injection of about 57 billion cubic feet (bcf) of gas into storage during the week ended Aug. 23. That compares with a five-year (2014-18) average build of 57 bcf for the period.
If estimates are on target, the increase last week would boost stockpiles to 2.854 trillion cubic feet (tcf), 3.5% below the five-year average, but still 14.4% above the same week a year ago. The US Energy Information Administration will release its weekly storage report at 10:30 a.m. EDT (1430 GMT) on Thursday.