Natural-gas futures fell Friday in quiet trading ahead of the Fourth of July holiday weekend.
Natural gas for August delivery settled 6.3 cents, or 1.44%, lower at $4.311 a million British thermal units on the New York Mercantile Exchange.
Futures pared gains made in the previous session on lower-than-expected Department of Energy weekly inventory data, but the benchmark contract still ended this week 1.9% higher.
"We've had a really decent bounce after testing support around the $4.20 level," said Matt Smith, commodity analyst with Summit Energy in Louisville, Ky.
Strong supply and a lack of extreme heat are still weighing on prices, Smith said.
Maintaining upward price momentum is also being challenged by a record production pace, analysts from Rittersbusch and Associates said in a note.
The Energy Information Administration reported earlier this week that April production for the lower 48 states was at the highest levels recorded in six years, about 69 billion cubic feet a day.
There is still a sizable supply deficit that is having difficulty closing, Rittersbusch and Associates analysts noted, as parts of northern Illinois reached 100 degrees Friday.
Demand for natural gas tends to rise in the summer as the fuel is burned to power air conditioning.
The hottest weather for the East Coast in the next two weeks is mainly confined to this weekend, Commodity Weather Group reported.
The private forecaster said the hottest temperatures so far this summer are expected to be seen in California and the West into early to middle next week. The interior upper West and parts of the South are also expected to see heat continue in the 11- to 15-day forecast.
Meanwhile, the number of rigs drilling in the U.S. for natural gas rose this week by one, to 874, according to Baker Hughes Inc. (BHI). The number last peaked at 992 last August, but the count remains above the 800 level. Many analysts believe the count must fall to around 800 before production balances with demand.
The number of rigs drilling for oil recently surpassed 1,000 and rose again this week to 1,006. Oil drilling can often yield significant volumes of gas along with crude oil.