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U.S. natgas slips on big storage build, less hot weather view

U.S. natural gas futures slid on Thursday after a federal report showed a bigger-than-expected injection into storage and forecasts for cooler weather that could reduce air-conditioning demand.

Front-month gas futures fell 21.2 cents, or 2.6%, to $8.054 per million British thermal units (mmBtu) at 11:25 a.m. EDT (1525 GMT).

“The EIA storage report was much more bearish than most were anticipating. If more gas is headed to storage, then more will be available in winter, which pushes prices downwards,” said John Abeln, an analyst with data provider Refinitiv.

The U.S. Energy Information Administration said utilities added 41 billion cubic feet (bcf) of gas to storage during the week ended July 29. That was above the 29-bcf build analysts had forecast in a Reuters poll.

“Expected temperature moderation across Eastern regions within 6–14-day time frame poised to limit upside follow through (in the market),” Ritterbusch & Associates wrote in a note.

Meanwhile, “reports of Freeport LNG restart in early October that could revive as much as 2 bcf/d of export activity,” was supportive for natgas prices, Ritterbusch & Associates added.

Freeport LNG said in a release on Wednesday that it entered into a consent agreement with the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) that should allow the plant “to resume initial operations in early October.”

“Production has gotten a lot stronger in the past week, with dry gas production consistently nearing or topping 98 Bcf – a level it had never reached previously. The market will definitely be looking to see if those production levels can be maintained over the near-term,” Abeln added.

Gazprom will receive 50% of a new Russian entity replacing the Sakhalin Energy liquefied natural gas (LNG) project, a government decree showed, as Moscow re-writes rules for foreign firms operating in the country amid sanctions.

Bulgaria’s energy ministry will launch a tender next week for liquefied natural gas (LNG) to prevent shortages during the winter, caretaker Prime Minister Galab Donev said.
Source: Reuters (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Howard Goller and Daniel Wallis)

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