Despite the decline, the front-month is still on track to post its second consecutive monthly gain and a small quarterly rise, having fallen in the previous three quarters. Gas production in the lower 48 states rose to an all-time high of 93.32 billion cubic feet per day (bcfd) on Sunday, according to Refinitiv data.
"The strong storage report last week suggests how strong production is given higher-than-normal demand due to above normal weather," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey. "I think there are still rooms for gas prices to go lower in the next month or so before the arrival of winter season." US Commodity Futures Trading Commission (CFTC) on Friday showed that natgas speculators in four major NYMEX, ICE markets boosted their net short position by 4,983 contracts to 58,377 in the week to September 24.
Analysts said utilities likely added 100 billion cubic feet (bcf) of gas to storage during the week ended Sept. 27. That compares with an injection of 91 bcf during the same week last year and a five-year (2014-18) average build of 83 bcf for the period.
If correct, that increase would boost stockpiles to 3.305 trillion cubic feet (tcf), 0.9% below the five-year average of 3.335 tcf for this time of year.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as much as 33% below that in March 2019. But with production hitting record highs, analysts said stockpiles should reach a near-normal 3.7 tcf by the end of summer injection season on October 31.
"Last week's bigger-than-expected injection is erasing fears of any supply tightness," said Phil Flynn, senior analyst at Price Futures Group in Chicago. Data provider Refinitiv projected gas demand in the lower 48 US states would slide to an average of 82.7 bcfd next week, compared with an average of around 85 bcfd forecast this week.