NEW YORK: US natural gas futures fell about 2 percent on Friday on mild weather forecasts that should limit heating and cooling demand, and ample amounts of gas in storage.
On its last day as the front-month, gas futures for October delivery on the New York Mercantile Exchange fell 6.9 cents, or 2.4 percent, to settle at USD2.835 per million British thermal units (mmBtu). On Thursday, the contract closed at its highest level since September 18.
For the week, the contract was down about 2 percent after falling by 2 percent last week and 4 percent two weeks ago.
Futures for November, which will soon be the front-month, were up less than 1 percent to USD3.21 per mmBtu, which would be a two-month high if that price holds on Monday. In the cash market, prices at the Waha Hub in West Texas and the AECO Hub in Alberta remained in negative territory because pipelines in both regions were constrained by expected and unexpected maintenance work.
For the Waha, that was the third time this week and the 12th time this year that prices were in negative territory. For AECO, this week was the first time average prices dropped into negative territory, doing so four times with each day setting a fresh record low, according to LSEG pricing data.
In the tropics, the US National Hurricane Center projected Hurricane Humberto would strengthen into a major hurricane as it moved west and then northwest through the Atlantic Ocean between Puerto Rico and Bermuda. The storm is not expected to hit land over the next week.
The NHC also said a tropical wave near the Bahamas had a 90percent chance of strengthening into a tropical cyclone over the next seven days.
At this time, neither system was expected to enter the Gulf of Mexico, but meteorologists at AccuWeather said the US Southeast could experience tropical rain and wind early next week.
Even though storms can boost gas prices by cutting output along the US Gulf Coast, they are more likely to reduce prices by shutting LNG export plants and knocking out power to homes and businesses. About 40percent of the power generated in the US comes from gas-fired plants.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 states fell to 107.4 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.
On a daily basis, output was on track to fall to a preliminary 11-week low of 106.3 bcfd on Friday. That compares with an all-time daily high of 109.7 bcfd on July 28. Preliminary data is often revised later in the day.
Record output earlier this year allowed energy companies to inject more gas into storage than usual so far this summer. There was about 6percent more gas in storage than normal for this time of year.
Meteorologists forecast the weather will remain mostly warmer than normal through at least October 11.
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