US natural gas futures climbed about 2.6% to an 11-week high on Wednesday on forecasts for seasonally cool weather over the next two weeks that should boost heating demand, a drop in daily output and an increase in flows to liquefied natural gas exports so far this month.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 7.6 cents, or 2.6%, to $3.041 per million British thermal units, putting the contract on track for its highest close since July 8.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 112.9 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
On a daily basis, however, output was on track to drop to an 11-week low of 109.8 bcfd on Wednesday due mostly to declines in Louisiana and Pennsylvania.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7% above normal in April.
But hotter-than-normal weather over the summer forced energy firms to pull lots of fuel from storage to produce the power needed to keep air conditioners humming, cutting the inventory surplus. About 40% of US power generation comes from gas-fired plants.
With the weather remaining hot last week, analysts predicted the amount of gas in storage slid to 3.0% above normal during the week ended September 18, down from 3.7% above normal in the previous week, according to estimates ahead of Thursday’s weekly federal inventory report.
Looking forward, however, meteorologists forecast the weather would remain mostly near normal through October 8.
LSEG said average gas demand in the Lower 48 states, including exports, would slide from 107.8 bcfd this week to 104.1 bcfd next week. Those forecasts were similar to LSEG’s outlook on Tuesday.
LNG EXPORTS
Average gas flows to the nine big US LNG export plants rose to 18.0 bcfd so far in September, up from 17.2 bcfd in August, but have remained short of the monthly record high of 18.8 bcfd in April.
The increase in average LNG feedgas so far in September occurred despite the shutdown of US energy firm Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland around September 19 for a few weeks of planned annual maintenance.
Around the world, gas traded near $24 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and $26 at the Japan-Korea Marker benchmark in Asia.
(Reporting by Scott DiSavino. Editing by Mark Potter)