US natgas futures gain on storm concerns and rising LNG exports

US natural gas futures climbed on Wednesday ahead of a storm that could disrupt Gulf Coast production and as liquefied natural gas (LNG) exports edge up with gas prices rocketing higher in Europe.

After dropping to record lows last week, major European gas benchmarks soared more than 40% over the past three days, driving forwards for September at the Title Transfer Facility (TTF) in the Netherlands above the US Henry Hub in Louisiana for the first time since late April.

In the Gulf of Mexico, meanwhile, Tropical Storm Cristobal is expected to sweep across Louisiana's on- and offshore production areas over the coming weekend.

Front-month gas futures rose 4.4 cents, or 2.5%, to settle at $1.821 per million British thermal units.

Looking ahead, futures for the balance of 2020 and calendar 2021 were trading about 23% and 47% over the front-month, respectively, on hopes the economy will snap back as governments lift coronavirus-linked travel restrictions.

Data provider Refinitiv said average gas output in the US Lower 48 states fell to 88.3 billion cubic feet per day (bcfd) so far in June, down from a one-year low of 89.3 bcfd in May and an all-time monthly high of 95.4 bcfd in November.

With the coming of warmer summer weather, Refinitiv projected US demand, including exports, would rise from 81.0 bcfd this week to 82.0 bcfd next week.

The amount of pipeline gas flowing to US LNG export plants was on track to reach 4.5 bcfd on Wednesday up from a 13-month low of 3.8 bcfd earlier in the week. That compares with an eight-month low of 6.4 bcfd in May and a monthly record high of 8.7 bcfd in February.

Analysts said US LNG exports dropped in recent months as buyers cancel cargoes due to the collapse in European prices.