U.S. natural gas futures were little changed on Thursday as the market waited for direction from a government report expected to show a bigger than usual storage build for an eighth week in a row.
Prices were steady despite a slowdown in output growth and forecasts for more heating demand over the next two weeks than previously expected.
Analysts forecast U.S. utilities added 63 billion cubic feet (bcf) of gas into storage during the week ended Oct. 29. That compares with a decrease of 27 bcf in the same week last year and a five-year (2016-2020) average increase of 38 bcf.
If correct, last week’s injection would boost stockpiles to 3.611 trillion cubic feet (tcf), which would be 2.7% below the five-year average of 3.712 tcf for this time of year.
In October, global gas prices soared to record highs as utilities scramble for liquefied natural gas (LNG) cargoes to refill low stockpiles in Europe and meet rising demand in Asia, where energy shortfalls have caused power blackouts in China. Analysts have said European inventories were about 15% below normal for this time of year.
U.S. futures also climbed in October, reaching a 12-year high early in the month, on expectations LNG demand will remain strong for many months.
Price gains in the United States, however, were restrained compared with overseas because the United States has more than enough gas in storage for winter and ample production to meet domestic and export demand. Despite recent pull backs, gas prices in Europe and Asia were still trading about five times higher than in the United States.
Front-month gas futures fell 0.6 cents, or 0.1%, to $5.664 per million British thermal units (mmBtu) at 7:48 a.m. EDT (1148 GMT).
Data provider Refinitiv said output in the U.S. Lower 48 states averaged 94.8 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October. That was lower than the November average on Wednesday due to reductions in Texas and Louisiana, and compares with a monthly record of 95.4 bcfd in November 2019.
Refinitiv projected average U.S. gas demand, including exports, would drop from 98.5 bcfd this week to 95.8 bcfd next week as the weather turns milder. Those forecasts were higher than Refinitiv projected on Wednesday.
The amount of gas flowing to U.S. LNG export plants averaged 10.8 bcfd so far in November, up from 10.5 bcfd in October. That compares with a monthly record of 11.5 bcfd in April.
With gas prices near $26 per mmBtu in Europe and $33 in Asia, versus around $6 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States can produce.
But no matter how high global gas prices rise, the United States only has the capacity to turn about 10.5 bcfd of gas into LNG. The rest of the gas flowing to the export plants is used to fuel equipment that produces the LNG.