HomeNewsU.S. natural gas prices up 2% to 3-week high on output decline, hot forecasts

U.S. natural gas prices up 2% to 3-week high on output decline, hot forecasts

9/1/2023

(Reuters) - U.S. natural gas futures climbed about 2% to a three-week high on Friday on a drop in daily output and forecasts for continued hot weather.

Capping those gains was a predicted reduction in gas use next week due in part to the three-day U.S. Labor Day holiday weekend, and forecasts that the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants will remain below highs seen earlier this year due to ongoing maintenance at some facilities.

Front-month gas futures for October delivery on the New York Mercantile Exchange rose 5.4 cents, or 2.0%, to $2.822 per million British thermal units at 9:57 a.m. EDT (1357 GMT).

For the week, the front-month was up about 11% after falling less than 1% last week.

In Georgia and Florida, there were still over 125,00 homes and businesses without power on Friday in the wake of Hurricane Idalia, according to data from PowerOutage.us. Those figures were down from outage peaks of around 288,000 in Florida and 217,000 in Georgia as utilities restored service.

Energy traders said the power outages were limiting the amount of gas that power generators in those states were burning to produce electricity.

The remains of Idalia were expected to die out in the Atlantic Ocean by the middle of next week. No tropical cyclones were

expected to make landfall in the U.S. over the next week, according to the latest forecast from the U.S. National Hurricane Center (NHC).

Supply and demand

Financial firm LSEG said average gas output in the lower 48 U.S. states rose to 102.2 billion cubic feet per day (bcfd) in August, up from 102.1 bcfd in July. That compares with a monthly record of 102.3 bcfd in May.

On a daily basis, however, output over the past couple of days was on track to drop by 2.7 bcfd to a preliminary four-month low of 99.2 bcfd on Friday. Energy traders noted that preliminary data - especially start of the month data - is often revised later in the day.

Meteorologists forecast that weather in the lower 48 U.S. states will remain mostly hotter than normal through at least Sept. 16.

LSEG forecast U.S. gas demand, including exports, will slide from 104.4 bcfd this week to 101.7 bcfd next week due in part to the long holiday weekend before rising to 103.2 bcfd in two weeks, due in part to a forecast increase in LNG exports. The forecasts for this week and next were similar to LSEG's outlook on Thursday.

Gas flows to the seven big U.S. LNG export plants fell from an average of 12.7 bcfd in July to 12.3 bcfd in August due mostly to reductions at Cheniere Energy's Sabine Pass in Louisiana and Corpus Christi in Texas. That compares with a monthly record of 14.0 bcfd in April.

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