U.S. natural gas futures jump 4% as output falls, LNG exports soar

U.S. natural gas futures jumped 4% on Monday as output fell and LNG exports soared. That price increase came despite forecasts for milder weather expected to produce little heating or cooling demand over the next two weeks. After falling to a four-week low last week, front-month gas futures rose 9 cents, or 4.0%, to $2.359 per million British thermal units at 9:11 a.m. EDT (1311 GMT). On Friday, the contract closed at its lowest since Aug. 13.

Gas speculators cut their net long positions on the New York Mercantile and Intercontinental Exchanges last week for the first time in seven weeks on expectations coronavirus demand destruction and record stockpiles would prevent price spikes and shortages this winter. Data provider Refinitiv said output in the Lower 48 U.S. states was on track to slide to a two-week low of 86.1 billion cubic feet per day (bcfd) on Monday. With the weather turning cooler, Refinitiv projected demand in the Lower 48, including exports, would slide from 85.3 bcfd this week to 82.4 bcfd next week.

The forecast for next week was lower than Refinitiv's outlook on Friday. The amount of gas flowing to U.S. LNG export plants, meanwhile, was on track to average 5.1 bcfd in September. That is the most in a month since May and is up for a second month in a row for the first time since hitting a record high of 8.7 bcfd in February. That LNG-export gain comes as Cheniere Energy Inc's Sabine Pass in Louisiana keeps ramping up after shutting in late August for Hurricane Laura and as global gas prices rise. That price increase makes U.S. gas more attractive in Europe and Asia following months of U.S. cargo cancellations due to coronavirus demand destruction.

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