(Reuters) - U.S. natural gas futures rose more than 1 percent after touching a nearly three-week low on Monday as concerns about a tighter market following Tropical Storm Harvey offset any effects from forecasts of lower cooling demand.
Front-month gas futures for September delivery on the New York Mercantile Exchange were up 4.3 cents, or 1.5 percent, at $2.935 per million British thermal units at 11:47 a.m. EDT (1547 GMT). The contract rebounded from $2.849, its lowest since Aug. 9.
About 26 percent of natural gas production in the Gulf of Mexico is offline due to Tropical Storm Harvey, the Bureau of Safety and Environmental Enforcement said in a statement on Sunday.
“The offline production of gas in the Gulf of Mexico was more than anticipated and surprising,” said analyst Phil Flynn of Price Futures Group in Chicago.
Although demand is expected to decrease due to power outages and cooler weather, supplies have been very tight this season, he added.
Early estimates showed utilities injected 38 billion cubic feet of gas into storage during the week ended Aug. 25. That compares with an addition of 46 bcf a year earlier and a five-year average injection of 67 bcf for the period.
If correct, total stocks would rise to 3.163 trillion cubic feet. That would put inventories about 7 percent below a year earlier and less than 1 percent above the five-year average.
Analysts have said utilities probably would stockpile just 1.7 trillion cubic feet of gas during the April-October injection season, below the five-year average of 2.1 tcf. Relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer have been limiting the quantities going into storage.
The projected build would put inventories at 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf.
Below-normal temperatures are forecast for the next two weeks, according to a U.S. weather model.
U.S. natural gas speculators cut their net long positions in the week to Aug. 22, betting prices would fall as futures tumbled on concerns that Harvey would hurt cooling demand, data on Friday showed.
The number of rigs drilling for natural gas in the United States fell by two last week to 180, data from oil services company Baker Hughes showed on Friday.
GRAPHIC-Baker Hughes rig count here
GRAPHIC-U.S. natural gas inventories vs five-year range tmsnrt.rs/2ewaRk2
GRAPHIC-U.S./Canada natural gas rig count vs Henry Hub futures price tmsnrt.rs/2eT9k44
Reporting by Vijaykumar Vedala in Bengaluru; Editing by Lisa Von Ahn