U.S. natural gas futures were little changed on Thursday as the market waited for direction from a federal report expected to show a smaller than usual storage build last week when colder than normal weather boosted heating demand.
That lack of price movement also came on the last day the November contract will be the front-month on the New York Mercantile Exchange, which has traditionally been a day of low volume and extreme volatility.
Analysts forecast U.S. utilities added 59 billion cubic feet (bcf) of gas to storage during the week ended Oct. 21. That compares with an increase of 88 bcf in the same week last year and a five-year (2017-2021) average increase of 66 bcf.
If correct, last week’s increase would push stockpiles to 3.401 trillion cubic feet (tcf), or 5.3% below the five-year average of 3.591 tcf for this time of the year.
Other factors affecting Thursday’s trade include bearish forecasts for milder weather and lower demand next week than previously expected, and output holding near record levels for the month.
On the bullish side, a couple of liquefied natural gas (LNG) export terminals were expected to exit outages soon, which will boost overall demand for gas.
Major LNG outages include Berkshire Hathaway Energy’s shutdown of its 0.8 billion cubic feet per day (bcfd) Cove Point LNG export plant in Maryland on Oct. 1 for a few weeks of planned maintenance, and the shutdown of Freeport LNG’s 2.0 bcfd plant in Texas for unplanned work after an explosion on June 8.
Freeport expects the facility to return to at least partial service in early- to mid-November.
At least three vessels were heading to Freeport, Refinitiv data showed. Prism Brilliance was off the coast from the plant, Prism Diversity was expected to arrive Oct. 28 and Prism Courage on Nov. 1.
While some traders expect Freeport to delay its return to service, company officials have said the plant remains on track to return in November.
On its last day as the front-month, gas futures for November delivery fell 2.1 cents, or 0.4%, to $5.585 per million British thermal units (mmBtu) at 7:47 a.m. EDT (1147 GMT).
Futures for December, which will soon be the front-month, were trading around $6.03 per mmBtu.
In the spot market, gas prices at the Waha hub in the Permian Shale in West Texas fell into negative territory in intraday trade this week as pipeline maintenance prevented some gas from leaving the basin.
Waha prices closed at a positive 1 cent per mmBtu for Thursday, their lowest since settling in negative territory in October 2020 for a second day in a row.
U.S. gas futures are up about 49% so far this year as soaring global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s Feb. 24 invasion of Ukraine.
Gas was trading at $32 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $30 at the Japan Korea Marker (JKM) in Asia.
Earlier this week, European forwards fell to $27 per mmBtu, their lowest close since June 13, as mild weather and strong LNG imports allowed utilities to boost the amount of gas in storage in northwest Europe to more than 90% of capacity. That put TTF down about 70% since settling at a record $90.91 in August.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states held at 99.4 bcfd so far in October, tying the monthly record in September.
With seasonally cooler weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 94.8 bcfd this week to 96.6 bcfd next week. The forecast for this week was higher than Refinitiv’s outlook on Wednesday, while its forecast for next week was lower.