U.S. natgas jumps over 10% from 7-wk low as demand and LNG exports rise

U.S. natural gas futures jumped over 10% on Wednesday from a seven-week low in the prior session as output continues to slide, demand edges up and LNG exports increase. Front-month gas futures rose 18.6 cents, or 10.1%, to $2.020 per million British thermal units (mmBtu) at 8:59 a.m. EDT (1259 GMT). On Tuesday, the contract closed at its lowest since July 31 for a second day in a row.

Trade this week has already been volatile - prices fell over 10% on Monday - as traders roll out of the front-month October contracts, which expire on Sept. 28, and into the much higher priced November . The premium of November over October <NGV20-X20> reached a record high of 89 cents per mmBtu earlier this week.

Data provider Refinitiv said output in the Lower 48 U.S. states was on track to fall to 83.8 billion cubic feet per day (bcfd) on Wednesday, its lowest since August 2018 as low prices earlier this year prompted energy firms to cut back on drilling by so much that the amount of gas from new wells was no longer enough to cover declines at existing wells. The rig count fell to a record low in mid August.

With low prices earlier in the week, Refinitiv projected demand, including exports, would rise from 82.0 bcfd this week to 84.4 bcfd next week as electric generators burn more gas instead of coal to produce power. The amount of gas flowing to LNG export plants was on track to rise from a two-week low of 3.9 bcfd on Tuesday to 4.0 bcfd on Wednesday as some vessels docked in the Gulf of Mexico after Tropical Storm Beta dissipated. U.S. pipeline exports to Mexico, meanwhile, were on track to average 6.0 bcfd in September, which would top August's record 5.9 bcfd.

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