NEW YORK: US natural gas futures held near a 13-week high on Thursday as the market waited for direction from a federal report expected to show last week’s storage build was smaller than normal for the 19th time in 20 weeks.
That lack of price movement came despite bullish forecasts for higher demand over the next two weeks than previously expected and a continued reduction in output ahead of Hurricane Helene.
Analysts forecast US utilities added 53 billion cubic feet (bcf) of gas into storage during the week ended Sept. 20. That compares with an increase of 82 bcf in the same week last year and a five-year (2019-2023) average rise of 88 bcf for this time of year.
If correct, that will leave gas stocks about 7% above normal for this time of year.
The US National Hurricane Center (NHC) forecast Helene would slam into the Florida Panhandle as a major hurricane later on Thursday.
Although storms are more likely to reduce gas demand and prices through power outages and shutting of liquefied natural gas (LNG) export plants, analysts said this storm was on track to miss the LNG plants.
That means demand for gas from those LNG export plants should remain high at the same time that some Gulf Coast producers have cut output ahead of the storm.
More than 75% of US gas production still comes from big inland shale basins like Appalachia in Pennsylvania, West Virginia and Ohio and the Permian in West Texas and eastern New Mexico, so most of the country’s gas output should remain safe from the storm.
On the last day as the front-month, gas futures for October delivery on the New York Mercantile Exchange fell 0.5 cents, or 0.2%, to $2.632 per million British thermal units (mmBtu) by 8:38 a.m. EDT (1238 GMT). On Wednesday, the contract closed at its highest since June 27.
Despite the small price decline, the front-month remained in technically overbought territory for a second day in a row for the first time since May.
Futures for November, which will soon be the front-month, were trading up about 1 cent at $2.82 per mmBtu.
LSEG said gas output in the Lower 48 US states has fallen to an average of 101.9 billion cubic feet per day (bcfd) so far in September, down from 103.2 bcfd in August.
But on a daily basis, output was on track to drop by around 3.1 bcfd over the past six days to a preliminary four-month low of 99.6 bcfd. Analysts, however, noted preliminary data is often revised later in the day.
Analysts said recent output reductions were partly due to producers curtailing Gulf of Mexico oil and gas production ahead of Helene and lower flows on a Natural Gas Pipeline Co (NGPL) pipe in Texas after a force majeure event at a compressor.
With milder autumn weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will drop from 99.5 bcfd this week to 98.5 bcfd next week. Those forecasts were higher than LSEG’s outlook on Wednesday.
Gas flows to the seven big US LNG export plants have eased to an average of 12.8 bcfd so far in September, down from 12.9 bcfd in August. That compares with a monthly record high of 14.7 bcfd in December 2023.
That reduction was due mostly to the planned Sept. 20 shutdown of Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland for around three weeks of annual maintenance.
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