Natural Gas Rally Capped by Record Production
Natural gas futures rose on Wednesday as temperatures soared across the US, but record production capped the rally.
The September contract increased by $0.047 or 1.72% to trade at $2.780 per million BTU after reaching a high of $2.798 and a low of $2.741.
Despite the increase in temperatures, lower-48 dry gas output averaged around 111.4 to 111.6 billion cubic feet per day (Bcf) in August, surpassing July's record monthly average.
The Permian oil drilling region continues to contribute associated gas to the market, with major shale basins not adjusting their production levels despite lower prices.
LNG feedgas deliveries to US export terminals averaged near 17.2 Bcf per day in August, close to recent highs, as Europe and Asia pull on US cargoes for replacement volumes due to Middle East disruptions.
The EIA Report showed that utilities injected 16 Bcf into storage during the week ending August 14, below analysts' expectations of around 19 Bcf. However, inventories rose to about 3,169 Bcf, roughly 6.2% above the five-year average.