NEW YORK: US natural gas futures eased on Thursday on forecasts for milder weather and less demand next week than previously expected.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 1.9 cents, or 0.6percent, to USD3.004 per million British thermal units. On Wednesday, the contract closed at its highest since July 8.
Prices declined despite a bullish drop in daily output and projections that 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 53 billion cubic feet of gas to storage during the week ended September 18.
That compares with an increase of 77 bcf during the same week last year and a five-year (2021-2025) average increase of 76 bcf for the period.
Financial firm LSEG said average gas output in the US Lower 48 states has risen to 112.8 billion cubic feet per day so far in September, up from a monthly record high of 112.2 bcfd in August.
On a daily basis, however, output was on track to drop to an 11-week low of 108.4 bcfd on Thursday, due mostly to declines in Louisiana and West Virginia.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7percent above normal in April.
But hotter-than-normal weather over the summer forced energy firms to pull lots of fuel from storage to produce the power needed to keep air conditioners humming, cutting the inventory surplus. About 40percent of US power generation comes from gas-fired plants.
With the weather remaining hot last week, analysts predicted the amount of gas in storage slid to 2.9percent above normal during the week ended September 18, down from 3.7percent above normal in the previous week, according to estimates ahead of Thursday’s weekly federal inventory report.
Looking forward, however, meteorologists forecast the weather would remain mostly near normal through October 9.
LSEG said average gas demand in the Lower 48 states, including exports, would slide from 108.0 bcfd this week to 103.3 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.
Average gas flows to the nine big US LNG export plants have risen to 17.8 bcfd so far in September, up from 17.2 bcfd in August, but have remained short of the monthly record high of 18.8 bcfd in April.
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