U.S. natural gas futures edged higher ahead of the expiry of the front-month September contract on Monday, with prices recovering from a more than one-week low hit earlier in the session on forecasts for hotter weather and higher cooling demand.
Gas futures for September delivery were up 22.4 cents, or 2.4%, to $9.52 per million British thermal units (mmBtu) by 10:23 a.m. EDT (1423 GMT), having earlier hit their lowest since Aug. 19, at $9.034.
“The biggest factor in natgas this morning is the upcoming settlement of the September contract. September is ending its term as the front month, and after this afternoon it will cease trading… the front-month will be extremely volatile today, as the volume of trading is far smaller than usual,” said John Abeln, an analyst with data provider Refinitiv.
Abeln added, “as far as fundamental changes, weather and demand models have moved somewhat more bullish over the weekend. But that effect might be dwarfed by last-minute trading.”
Gas was trading around $88 per mmBtu in Europe and $69 in Asia.
Meanwhile, Dutch wholesale gas prices eased after hitting their highest since March last week as demand softened and traders booked profits in subdued activity with markets in Britain closed for a public holiday.
“Near-record European gas prices continue to support U.S. values both psychologically and fundamentally since LNG export activity will almost surely be maxed through the upcoming fall and winter periods,” Ritterbusch and Associates said in a note.
But some analysts have cautioned that the lift from global gas prices may be capped by limited capacity in the United States for exports, and more recently an extension to an outage at the fire-hit Freeport LNG export hub in Texas.
The Freeport outage was also seen limiting potential U.S. supply to Europe heading into winter. The region was also gearing for a scheduled outage on the Nord Stream 1 pipeline for three days from Aug. 31 to Sep. 2 that could hit supplies, with market players concerned flows might not resume.