U.S. natural gas futures eased about 1% on Thursday due forecasts for milder weather over the next two weeks than previously expected and a decline in the amount of gas flowing to liquefied natural gas (LNG) export plants.
That small price decline came despite a federal report showing a storage build that was close to analysts estimates.
The U.S. Energy Information Administration (EIA) said utilities added 64 billion cubic feet (bcf) of gas into storage during the week ended Sept. 15.
That was near the 67-bcf build analysts forecast in a Reuters poll and compares with an increase of 99 bcf in the same week last year and a five-year (2018-2022) average increase of 84 bcf.
Analysts projected that build was smaller-than-usual because warmer-than-normal weather last week prompted power generators to burn more of the fuel to keep air conditioners humming.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 3.6 cents, or 1.3%, to $2.697 per million British thermal units (mmBtu) at 11:02 a.m. EDT (1502 GMT).
Before EIA released its storage report, gas prices were up 0.3%.
In other news, the U.S. National Hurricane Center projected there was a 40% chance that a tropical cyclone could develop off Georgia and the Carolinas on the U.S. East Coast during the next week and a 70% chance that a cyclone could develop in the Central Atlantic between the Cape Verde islands and the Caribbean Sea.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states eased to 102.1 billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.
But on a daily basis, output over the past four days was on track to drop by around 2.1 bcfd to a preliminary 10-week low of 100.6 bcfd on Thursday. Analysts have noted that preliminary data is often revised later in the day.
Meteorologists forecast the weather in the lower 48 states would remain near normal until around Sept. 30 before turning mostly warmer than usual from Oct. 1-6. Traders, however, noted that above normal temperatures in late September were still mild, with averages expected to be around 71 degrees Fahrenheit (21.7 Celsius) versus a normal of 70 F for that time of year.
With seasonally cooler coming, LSEG forecast U.S. gas demand, including exports, will ease from 95.3 bcfd this week to 93.7 bcfd next week. Those forecasts were lower than LSEG’s outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants averaged 12.8 bcfd so far in September, up from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
On a daily basis, however, feedgas was on track to fall to a three-week low of 11.6 bcfd on Thursday due to the shutdown of Berkshire Hathaway Energy’s 0.8-bcfd Cove Point in Maryland for annual maintenance and a reduction at Cheniere Energy’s 4.5-bcfd Sabine Pass in Louisiana.
Gas flows to Sabine were on track to drop to a one-month low of 3.6 bcfd on Thursday from an average of 4.5 bcfd over the past several weeks.
Pipeline exports to Mexico, meanwhile, have averaged 7.2 bcfd so far in September, up from a record 7.1 bcfd in August, according to LSEG data.
(Reporting by Scott DiSavino and Nicole Jao; Editing by Paul Simao and Timothy Gardner)