NEW YORK: US natural gas futures gained over 3% on Wednesday as producers shut Gulf of Mexico wells ahead of Hurricane Delta and on forecasts for larger-than-expected demand over the next two weeks.
Prices rose despite worries Delta could cut liquefied natural gas (LNG) exports as happened with Hurricane Laura in late August. Actual gas flows to LNG export plants, however, were at their highest since April.
Delta is expected to slam into Louisiana as a major hurricane on Friday.
Front-month gas futures rose 8.6 cents, or 3.4%, to settle at $2.606 per million British thermal units.
Data provider Refinitiv said output in the Lower 48 US states was on track to drop from a four-month low of 84.8 billion cubic feet per day (bcfd) on Tuesday to a 26-month low of 83.3 bcfd on Wednesday as Gulf Coast producers shut wells. That data is preliminary and subject to change later in the day.
The US Bureau of Safety and Environmental Enforcement said energy firms shut in 1.3 bcfd, or 49%, of offshore Gulf of Mexico gas production.
With milder weather coming, Refinitiv projected demand, including exports, would slip from 87.0 bcfd this week to 86.8 bcfd next week. That, however, was higher than Refinitiv's forecasts on Tuesday.
The amount of gas flowing to LNG export plants averaged 7.2 bcfd so far in October, up from 5.7 bcfd in September. That was on track to rise for a third month in a row for the first time since hitting a record 8.7 bcfd in February as higher global gas prices in recent months have prompted buyers to reverse some cargo cancellations.
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