US natgas on track for 20-month high as LNG exports rise, cold weather

US natural gas futures gained over 4% and were on track for their highest close in 20 months on Tuesday on rising liquefied natural gas (LNG) exports and forecasts for colder weather and more heating demand over the next two weeks than previously expected.

Front-month gas futures rose 11.9 cents, or 4.3%, to $2.914 per million British thermal units at 8:35 a.m. EDT (1235 GMT), putting the contract on track for its highest close since January 2019.

Data provider Refinitiv said output in the Lower 48 US states slipped to 88.4 billion cubic feet per day (bcfd) on Monday from a six-week high of 88.6 bcfd last week.

As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 90.0 bcfd this week to 98.7 bcfd next week.

Tankers were entering and leaving Cheniere Energy Inc's Sabine Pass LNG export plant in Louisiana despite draft limitations in the Sabine-Neches Waterway after a rig ran aground in the channel over the weekend. The amount of gas flowing to LNG export plants has averaged 6.9 bcfd so far in October, up from 5.7 bcfd in September.

That would be the most LNG exports in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompted buyers to reverse cargo cancellations.

US exports fell from March to July as coronavirus-related demand destruction caused prices in Europe and Asia to collapse to record lows and buyers to cancel around 175 US cargoes.

But now, front-month gas prices in Europe and Asia were trading at their highest since November 2019 and October 2019, respectively, putting both more than $2 per mmBtu over the US Henry Hub benchmark.