U.S. natgas prices hold steady as surprise storage build offsets rising demand
(Reuters) - U.S. natural gas futures were little changed on Thursday as a surprise build in weekly storage and forecasts for less cold weather through mid-December than previously expected offset a drop in output over the past few days and forecasts for higher demand over the next two weeks.
The U.S. Energy Information Administration (EIA) said utilities added a surprise 10 billion cubic feet (bcf) of gas into storage during the week ended Nov. 24, when warmer-than-usual weather kept heating demand low.
That compares with analysts' estimates in a Reuters poll for a 12-bcf withdrawal, a decline of 80 bcf in the same week last year and a five-year (2018-2022) average decline of 44 bcf.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 0.2 cent, or 0.1%, to settle at $2.802 per million British thermal units (mmBtu).
For the month, the front-month was down about 22% in November after rising about 22% in October. That was the biggest monthly percentage drop since January when it plunged by 40%.
With production at record highs and ample amounts of gas in storage, the futures market has been sending signals that some traders have given up hope of seeing price spikes this winter. In fact, many in the market think futures for this winter
(November-March) have already peaked in November.
SUPPLY AND DEMAND
LSEG said average gas output in the Lower 48 U.S. states rose to 107.7 billion cubic feet per day (bcfd) so far in November, up from a record 104.2 bcfd in October.
On a daily basis, however, output was on track to drop by 3.1 bcfd over the past three days to a preliminary three-week low of 106.3 bcfd on Thursday after hitting a record 109.4 bcfd on Monday. Traders have noted that preliminary data is often revised later in the day.
Meteorologists projected the weather would remain warmer than normal through at least Dec. 14.
With less cold coming, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would drop from 129.3 bcfd this week to 119.6 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 14.3 bcfd so far in November, up from 13.7 bcfd in October and a monthly record of 14.0 bcfd in April.
The U.S. is on track to become the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due in part to supply disruptions and sanctions linked to the war in Ukraine.
Gas was trading around $13 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $16 at the Japan Korea Marker (JKM) in Asia.
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