U.S. natural gas futures eased about 1% on Friday on forecasts for milder weather and less demand next week than previously expected.
That price decline occurred despite a reduction in output, record exports to Mexico and a rise in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants even though some plants were reduced for maintenance.
Front-month gas futures for November delivery on the New York Mercantile Exchange were down 3.7 cents, or 1.3%, to $2.908 per million British thermal units (mmBtu) at 10:01 a.m. EDT (1401 GMT).
For the week, the contract was up about 10% after easing less than 1% last week.
For the month, the contract was up about 5% after gaining about 5% last month.
For the quarter, the contract was up about 4% after soaring about 26% last quarter.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states has slid to 102.1 billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.
Meteorologists forecast the weather in the lower 48 states would remain mostly warmer than normal through Oct. 14 except for some cooler near-normal days around Oct. 7-11.
With the weather expected to remain mostly mild, LSEG forecast U.S. gas demand, including exports, would slide from 95.7 bcfd this week to 94.8 bcfd next week as power generators cut back on the amount of gas they need to burn to keep air conditioners humming.
The forecast for next week was lower than LSEG’s outlook on Thursday.
But with seasonally cooler weather coming and exports expected to rise, LSEG forecast gas demand would climb to 95.8 bcfd in two weeks as heating demand increases.
Pipeline exports to Mexico have risen to an average of 7.2 bcfd so far in September, up from a record 7.1 bcfd in August, according to LSEG data.
Analysts expect exports to Mexico to rise even higher in coming months once New Fortress Energy’s Altamira liquefied natural gas (LNG) export plant enters service.
Gas flows to the seven big U.S. LNG export plants have risen to an average of 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.
That increase in LNG feedgas happened despite ongoing maintenance at Berkshire Hathaway Energy’s 0.8-bcfd Cove Point in Maryland and reductions at other plants, including Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas.
Cove Point shut for about two weeks of maintenance on Sept. 20.
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 to the war in Ukraine.
Gas was trading around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $13 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Paul Simao)