NEW YORK: US natural gas futures eased on Thursday on a decline in daily flows to liquefied natural gas (LNG) export plants to a three-week low.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 1.5 cents, or 0.5percent, to USD2.876 per million British thermal units (mmBtu).
Prices declined despite bullish forecasts for more demand over the next two weeks than previously expected and projections a federal report on Thursday will show that hot weather and high air conditioning demand last week caused energy firms to add less gas to storage than usual for this time of year.
Analysts forecast energy firms added 49 billion cubic feet (bcf) of gas to storage during the week ended September 11.
That compares with an increase of 87 bcf during the same week last year and a five-year (2021-2025) average increase of 74 bcf for the period.
In a sign that the market is not too worried about gas supplies this winter, the premium of futures for March over April 2027 fell to a record low of around 11 cents per mmBtu.
Analysts have said March, the last month of the peak winter heating season when utilities pull gas out of storage to meet demand, should never trade below April, the first month of the summer air conditioning season when energy firms produce enough gas to meet demand and inject fuel into storage for the next winter.
The industry calls the March-April spread the “widow-maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business. Notably, the Amaranth hedge fund lost more than USD6 billion in 2006.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 113.1 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
Record output and mild weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March.
Meteorologists forecast weather would remain mostly warmer through October 2, with power generators burning more gas than usual to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants.
LSEG said average gas demand in the Lower 48 states, including exports, is expected to slide from 109.6 bcfd this week to 106.6 bcfd next week. Those forecasts were higher than LSEG’s outlook on Wednesday.
Average gas flows to the nine big US LNG export plants rose to 18.2 bcfd so far in September, up from 17.2 bcfd in August, but remained short of the monthly record high of 18.8 bcfd in April.
On a daily basis, however, LNG feedgas was on track to fall to a three-week low of 17.5 bcfd on Thursday due mostly to maintenance at US energy firm Sempra Energy’s 2.0-bcfd Cameron LNG plant in Louisiana.
US energy firm Berkshire Hathaway Energy, meanwhile, said it plans to start planned maintenance on its 0.8-bcfd Cove Point LNG export plant in Maryland over the next week or so.
Around the world, gas traded near 44-month highs of around USD26 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and USD27 at the Japan-Korea Marker benchmark in Asia.
Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the Iran war this year.
Prices in the US, however, have not reacted much to the war in Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
No matter how high global gas prices go, the US cannot export much more LNG until units under construction enter service in coming months and years.
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