U.S. natural gas futures slipped on Wednesday from a near 14-week high on forecasts for a little less cooling demand over the next two weeks than previously expected and a continued slowdown in export growth.
Front-month gas futures for October delivery on the New York Mercantile Exchange were down 3.2 cents, or 1.2%, to $2.548 per million British thermal units at 8:28 a.m. EDT (1228 GMT). On Monday, the contract closed at its highest since May 29.
Despite the decline, the front-month was still up over 25% from a recent three-year low of $2.029/mmBtu on Aug. 5, keeping the contract in overbought territory for a seventh day in a row for the first time since November 2018.
Traders said the front-month stopped setting fresh 14-week highs on Tuesday because liquefied natural gas (LNG) and pipeline exports have not increased this week as earlier expected.
The U.S. National Weather Service forecast temperatures would remain above normal over the eastern half of the country during the next 15 days but would be a little less warm during the 8-14 day period than in the prior outlook.
Even though the weather is expected to moderate a bit in late September, data provider Refinitiv projected demand in the Lower 48 U.S. states would still rise to 87.0 billion cubic feet per day (bcfd) next week from 86.5 bcfd this week as more gas flows to LNG export terminals.
Gas flows to LNG export plants, however, have averaged only 5.8 bcfd this week, the same as last week, due to planned maintenance on Train 5 at Cheniere Energy Inc’s Sabine Pass facility in Louisiana, according to Refinitiv data.
Refinitiv forecast flows to LNG export terminals could rise as high as 6.5 bcfd next week, just shy of the daily record high of 6.8 bcfd on Aug. 25.
Exports to Mexico, meanwhile, have averaged 5.2 bcfd this week, again the same as last week, as the market continued to wait for the startup of the 2.6-bcfd Valley Crossing and Sur de Texas-Tuxpan pipes after TC Energy Corp and Sempra Energy’s IENOVA unit resolved pipeline contract disputes with Mexico’s Federal Electricity Comission in late August.
Analysts said utilities likely added 82 billion cubic feet (bcf) of gas into storage during the week ended Sept. 6. That compares with an injection of 68 bcf during the same week last year and a five-year (2014-18) average build of 73 bcf for the period.
If correct, the addition last week would boost stockpiles to 3.023 trillion cubic feet (tcf), 2.4% below the five-year average of 3.096 tcf for this time of year.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production expected to keep growing from a record high, analysts said, stockpiles should reach a near-normal 3.7 tcf by the end of the summer injection season on Oct. 31.
Gas production in the Lower 48 states fell to a five-week low of 91.2 bcfd on Tuesday due mostly to reductions in Louisiana from 92.6 bcfd on Monday, according to Refinitiv. That compares with an all-time daily high of 93.0 bcfd on Aug. 19.