U.S. natural gas futures slid about 2% to a two-week low on Tuesday on forecasts for the weather to remain mild through the middle of October and a drop in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants.
On its second to last day as the front-month, gas futures for October delivery on the New York Mercantile Exchange were down 6.2 cents, or 2.4%, to $2.577 per million British thermal units (mmBtu) at 9:12 a.m. EDT (1312 GMT), putting the contract on track for its lowest close since Sept. 6.
Futures for November, which will soon be the front-month, were down about 8 cents to $2.83 per mmBtu.
Financial firm LSEG said average gas output in the lower 48 U.S. states has eased to 102.1 billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.
On a daily basis, output was on track to drop by 1.7 bcfd to a preliminary 13-week low of 100.3 bcfd on Tuesday. If correct, that would be the biggest one-day drop since early August, but energy traders have noted that preliminary data is often revised later in the day.
Meteorologists forecast the weather in the lower 48 states would remain warmer than normal through at least Oct. 11. But energy analysts noted that above-normal temperatures in early October were still relatively mild, with averages expected to be around 72 degrees Fahrenheit (22.2 Celsius) versus a normal of 69 F for that time of year.
With LNG and pipeline exports expected to increase, LSEG forecast U.S. gas demand, including exports, would edge up from 94.5 bcfd this week to 94.8 bcfd next week. Those forecasts were similar to LSEG’s outlook on Monday.
Pipeline exports to Mexico, meanwhile, have averaged 7.2 bcfd so far in September, up from a record 7.1 bcfd in August, according to LSEG data.
Gas flows to the seven big U.S. LNG export plants have averaged 12.6 bcfd so far in September, up from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
On a daily basis, however, feedgas was expected to drop to a four-week low of 11.2 bcfd on Tuesday due to the shutdown on Sept. 20 of Berkshire Hathaway Energy’s 0.8-bcfd Cove Point in Maryland for about a week of annual maintenance and small reductions at other plants.
The U.S. is on track to become the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due to supply disruptions and sanctions linked mostly to Russia’s war in Ukraine.
Gas was trading around $13 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $15 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Paul Simao)