U.S. natural gas futures edged up about 1% on Tuesday to a fresh eight-month high on rising exports and higher global gas prices.
That price increase came despite forecasts for milder weather and less heating demand over the next two weeks than previously expected.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 2.7 cents, or 0.8%, to $3.403 per million British thermal units (mmBtu) at 8:47 a.m. EDT, putting the contract on track for its highest close since Jan. 23 for a third day in a row.
That also put the front-month up for a sixth day in a row for the first time since March and kept it in technically overbought territory, with a relative strength index (RSI) above 70, for a fourth day in a row for the first time since July 2022.
In Europe, gas prices at the Title Transfer Facility (TTF) benchmark in the Netherlands soared about 14% to around $15 per mmBtu on worries about global supplies due to violence in the Middle East and colder weather forecasts.
The U.S. National Hurricane Center said there was a 30% chance a tropical cyclone could form in the western Gulf of Mexico over the next week. Traders noted a storm in that area could boost prices by reducing supplies if it moves toward Texas or Louisiana.
In the U.S. spot market, next-day gas for Tuesday at the Henry Hub benchmark in Louisiana rose to $3.30 per mmBtu, its highest since January 2023 for a second day in a row.
But the spot market will continue to weigh on U.S. futures so long as next-day prices remain below the front-month. Next-day prices have closed below the front-month for 158 of the 193 trading days so far this year, according to data from financial firm LSEG.
SUPPLY AND DEMAND
LSEG said average gas output in the lower 48 U.S. states rose to 102.7 billion cubic feet per day (bcfd) so far in October, up from 102.6 bcfd in September but still below the monthly record of 103.1 bcfd in July.
On a daily basis, however, output was on track to drop by 2.3 bcfd to a preliminary 102.1 bcfd on Tuesday. That would be the biggest one-day decline in output since early August, but energy traders noted preliminary data is often revised later in the day.
With seasonally cooler weather coming, LSEG forecast U.S. gas demand, including exports, would rise from 94.7 bcfd this week to 96.2 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
Pipeline exports to Mexico held near 7.2 bcfd so far in October, the same as the monthly record high hit in September.
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 rose to 12.9 bcfd so far in October, up from 12.6 bcfd in September, but still well below the record high of 14.0 bcfd in April.
Energy traders said they expected total LNG feedgas to rise to near record levels over the next week or so once Berkshire Hathaway Energy’s 0.8-bcfd Cove Point facility in Maryland exits a maintenance outage.
Cove Point shut around Sept. 20. Analysts at LSEG have said the plant usually shuts for about three weeks of maintenance each autumn.
(Reporting by Scott DiSavino; Editing by Chizu Nomiyama)