U.S. natural gas futures climbed about 2% on Tuesday on a decline in output and forecasts for cooler weather and more heating demand next week than previously expected.
Front-month gas futures for November delivery on the New York Mercantile Exchange were up 6 cents, or 2.1%, to $2.900 per million British thermal units (mmBtu) at 9:38 a.m. EDT (1338 GMT).
Financial firm LSEG said average gas output in the lower 48 U.S. states has slid to 101.9 billion cubic feet per day (bcfd) so far in October, down from 102.9 bcfd in September and a monthly record high of 103.1 bcfd in August.
On a daily basis, output fell by about 1.5 bcfd over the past five days to a preliminary 11-week low of 101.6 bcfd on Tuesday. Energy traders have noted that preliminary data is often revised later in the day.
Meteorologists forecast the weather in the lower 48 states would turn from warmer than normal now to near normal from Oct. 7-18.
LSEG forecast U.S. gas demand, including exports, would hold near 95.2 bcfd this week and next. Those forecasts were higher than LSEG’s outlook on Friday due to expectations of seasonally cooler weather.
RISING EXPORTS
Pipeline exports to Mexico so far in October have held near the 7.2 bcfd monthly record hit in September, according to LSEG data.
Analysts expect exports to Mexico to rise even higher in coming months once New Fortress Energy’s plant in Altamira starts pulling in U.S. gas to turn into liquefied natural gas (LNG) for export.
Gas flows to the seven big U.S. LNG export plants have risen to an average of 12.7 bcfd so far in October, up from 12.6 bcfd in September. 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 facility 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 around Sept. 20.
Freeport LNG, meanwhile, sought permission from federal energy regulators to take more steps to return its export plant in Texas to full commercial operation.
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 $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $14 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Paul Simao)