U.S. natural gas futures jumped about 4% to a nine-month high on forecasts for colder weather and higher heating demand over the next two weeks than previously expected.
Front-month gas futures for December delivery on the New York Mercantile Exchange rose 13.9 cents, or 4.2%, to $3.491 per million British thermal units (mmBtu) at 9:28 a.m. EDT (1328 GMT), putting the contract on track for its highest close since Jan. 17.
That also kept the front-month in technically overbought territory, with a relative strength index (RSI) over 70, for a second day in a row for the first time since mid-October.
For the month, the contract was up about 19%, its biggest monthly percentage gain since June when it jumped about 23%. October was also the first time the contract rose for three months in a row since May 2022.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to an average of 104.1 billion cubic feet per day (bcfd) so far in October, up from 102.6 bcfd in September and a record high of 103.1 bcfd in July.
Meteorologists forecast the weather will go from colder than normal now to mostly warmer than normal from Nov. 3-7 before turning colder again from Nov. 8-11.
With a few days of warmer weather coming, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would drop from 110.2 bcfd this week to 105.5 bcfd next week. Those forecasts, however, were higher than LSEG’s outlook on Monday.
Pipeline exports to Mexico slid to an average of 6.8 bcfd so far in October, down from a monthly record high of 7.2 bcfd in September.
Analysts, however, expect exports to Mexico to rise in coming months once U.S. energy company New Fortress Energy’s plant in Altamira starts pulling in U.S. gas to turn into liquefied natural gas (LNG) for export in November.
Gas flows to the seven big U.S. LNG export plants rose to 13.7 bcfd so far in October, up from 12.6 bcfd in September, but still below a monthly record high of 14.0 bcfd in April.
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 in part to supply disruptions and sanctions linked to the war in Ukraine.
Gas was trading around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $18 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; editing by Jonathan Oatis)