U.S. natural gas futures climbed about 2% to a one-week high on Tuesday on forecasts for warmer weather and higher demand over the next two weeks than previously expected.
Traders also noted that prices rose on a big drop in daily in U.S. output.
Capping those gains, however, was the ongoing reduction in feedgas to Freeport LNG’s liquefied natural gas (LNG) export plant in Texas over the past several days.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 6.1 cents, or 2.3%, to $2.669 per million British thermal units (mmBtu) at 9:08 a.m. EDT (1308 GMT), putting the contract on track for its highest close since Sept. 1 for a third day in a row.
That also put the front-month on track to rise for a fourth day in a row for the first time since early August.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states held at 102.3 billion cubic feet per day (bcfd) so far in September, the same as the record high hit in August.
On a daily basis, however, output was on track to drop about 2.9 bcfd to a preliminary 12-week low of 99.8 bcfd on Tuesday. That would be the biggest one-day decline since December, but energy traders noted preliminary data is often revised later in the day.
Meteorologists forecast the weather would remain mostly near normal from Sept. 12-18 before turning hotter than usual from Sept. 19 through at least Sept. 27.
But with seasonally cooler weather coming, LSEG forecast U.S. gas demand, including exports, will slide from 99.7 bcfd this week to 96.2 bcfd next week. Those forecasts were higher than LSEG’s outlook on Monday.
Gas flows to the seven big U.S. LNG export plants eased to an average of 12.2 bcfd so far in September, down from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
On a daily basis, however, LNG feedgas fell to a preliminary eight-month low of 9.1 bcfd due mostly to a reduction over the weekend at Freeport from around 1.8 bcfd last week to an average of 0.5 bcfd over the past four days, according to LSEG data.
(Reporting by Scott DiSavino, editing by Ed Osmond)