FX.co ★ US Natgas Prices Fall Toward 4-Month Low

US natural gas prices fell more than 3% to about $2.64 per million British thermal units on Monday, nearing their mid-April lows. The decline was driven by strong output and ample inventories.

The latest EIA report showed that energy firms injected 36 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. At the same time, production in the Lower 48 states has averaged a record 111.3 bcfd so far in August, up from 110.7 bcfd in July, keeping storage levels above their five-year average since March.

Additional downward pressure came from slightly weaker export activity. Gas flows to the nine major US LNG export facilities have slipped to 17.1 bcfd so far this month, from 17.2 bcfd in July, reducing the volume of gas processed for export and leaving more supply on the domestic market.

These bearish supply and storage dynamics have outweighed support from weather-driven demand, even as forecasts call for hotter-than-normal conditions through the end of August.