NEW YORK, US natural gas futures climbed about 2 percent on Tuesday on a drop in output in recent days.
Front-month gas futures for December delivery on the New York Mercantile Exchange rose 6.5 cents, or 2 percent, to USD2.921 per million British thermal units (mmBtu).
Financial firm LSEG said average gas output in the US Lower 48 states fell to 110.0 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October and a monthly record high of 115.0 bcfd in August.
On a daily basis, output was on track to drop to a five-month low of 108.1 bcfd on Tuesday.
Record output and mild spring weather earlier this year allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7 percent above normal in April.
But hotter-than-normal weather over the summer forced energy firms to pull lots of gas out of storage to fuel power plants to keep air conditioners humming, cutting the inventory surplus. About 40 percent of US power generation comes from gas-fired plants.
With the return of mild weather and low demand, energy firms have been able to add more gas than usual into storage in recent weeks. The amount of gas in storage likely climbed to 1.4 percent above normal during the week ended October 30, up from 1.0 percent above normal in the previous week, according to analyst estimates ahead of Thursday’s weekly federal inventory report.
Looking ahead, meteorologists predicted weather across the country would remain mostly milder than normal through November 18, which should keep heating demand lower than usual in coming weeks.
Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 108.1 bcfd this week to 116.0 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
Average gas flows to the nine major US LNG export plants fell to 17.7 bcfd so far in November, down from 18.4 bcfd in October and a monthly record high of 18.8 bcfd in April.
Demand for US gas is high around the world due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Gas was trading around USD32 per mmBtu at both the Dutch Title Transfer Facility benchmark in Europe and the Japan-Korea Marker benchmark in Asia.
US gas prices, however, have not reacted much to the conflicts in Ukraine and Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
As a result, no matter how high global gas prices go, the US cannot send more LNG to the rest of the world until new liquefaction units under construction in the US enter service in coming months and years.
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