U.S. natgas prices hold near nine-month low as record output offsets higher demand forecasts

• Gas stockpiles at 6% above normal levels, and rising
• Record output and ample storage offset demand increase
• Atlantic storms unlikely to impact US gas production

U.S. natural gas futures held near a nine-month low on Wednesday as forecasts for higher demand over the next two weeks and rising gas flows to liquefied natural gas (LNG) export plants offset near-record output and ample fuel in stockpiles.

Front-month gas futures for September delivery on the New York Mercantile Exchange fell 0.4 cents, or 0.1%, to $2.762 per million British thermal units at 9:37 a.m. EDT (1337 GMT), putting the contract on track for its lowest close since November 8 for a second day in a row. That price decline kept the front-month in technically oversold territory for a second day in a row.

Supply and demand. Financial firm LSEG said average gas output in the Lower 48 states rose to 108.4 Bft³d so far in August, up from a record monthly high of 107.8 Bft³d in July.

Meteorologists forecast the weather will remain mostly near normal through September 4, which is about the same as previously expected. Despite hotter-than-usual weather earlier in the summer, record output allowed energy companies to inject more gas into storage than usual in recent months.

Analysts said there was about 6% more gas in storage than normal for this time of year and predicted inventories would keep growing at a faster than usual pace in coming weeks.

LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 111.0 Bft³d this week to 106.6 Bft³d next week. Those forecasts were higher than LSEG's outlook on Tuesday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 15.8 Bft³d so far in August, up from 15.5 Bft³d in July. That compares with a record monthly high of 16.0 Bft³d in April.

On a daily basis, LNG export feedgas was on track to rise to 15.3 Bft³d on Wednesday from a two-week low of 14.2 Bft³d on both Monday and Tuesday due to reductions at several plants, including Cheniere Energy's 4.5-Bft³d Sabine Pass in Louisiana, Cameron LNG's 2-Bft³d plant in Louisiana, and Freeport LNG’s 2.1-Bft³d plant in Texas.

Atlantic storms. The U.S. National Hurricane Center (NHC) projected Hurricane Erin, which was in the Atlantic Ocean between Florida and Bermuda, would move northeast off the U.S. East Coast for the rest of the week without hitting land. The storm, however, could cause some tropical storm force winds in eastern North Carolina and Virginia over the next 24 hours.

The NHC said two other systems in the Atlantic Ocean - one with a 60% chance and one with a 40% chance - could strengthen into cyclones over the next week. Both systems, however, were expected to remain far from the U.S. mainland, at least for the next week or so.

Even though storms can boost gas prices by knocking Gulf of Mexico gas production out of service, analysts have said storms are more likely to cut demand and prices by shutting LNG export plants and knocking power out to millions of homes and businesses, reducing the amount of gas that electric generators need to burn.

Only about 2% of all U.S. gas comes from the federal offshore Gulf of Mexico, while more than 40% of the electricity produced in the U.S. comes from gas-fired power plants.

(Reporting by Scott DiSavino in New YorkEditing by Tomasz Janowski)

Related News

Comments

{{ error }}

Add Comment

{{ comment.comment.Name }} Editor • {{ comment.timeAgo }}

{{ comment.comment.Text }}

Related News

• Most Read
• Most Commented