US natgas flat as cooler weather offsets lower output from Hurricane Sally

US natural gas futures were little changed on Tuesday as forecasts for milder weather over the next two weeks offset an output decline as producers shut some Gulf of Mexico wells before Hurricane Sally smashes into the coast.

Sally is expected to hit near the Mississippi-Alabama border early Wednesday. Entergy Corp, the biggest power company in Mississippi, still has about 50,000 customers without service in southwestern Louisiana since late August from Hurricane Laura.

Front-month gas futures rose 0.5 cents, or 0.2%, to $2.315 per million British thermal units at 8:10 a.m. EDT (1210 GMT).

Data provider Refinitiv said output in the Lower 48 US states was on track to slide to a 16-week low of 84.6 billion cubic feet per day (bcfd) on Tuesday due to Sally-related shutdowns. The US Bureau of Safety and Environmental Enforcement (BSEE) said almost 0.7 bcfd, or about 25%, of Gulf of Mexico gas production was shut-in on Monday.

With cooler weather coming, Refinitiv projected demand, including exports, would fall from 84.8 bcfd this week to 81.9 bcfd next week.

The amount of gas flowing to US LNG export plants, meanwhile, has averaged 5.2 bcfd so far in September. That is the most in a month since May and up for a second month in a row for the first time since hitting the 8.7-bcfd record high in February.

The LNG-export gain comes as Cheniere Energy Inc's Sabine Pass in Louisiana ramps up after shutting in late August for Hurricane Laura and as global gas prices rise, making US gas more attractive in Europe and Asia following months of US cargo cancellations due to coronavirus demand destruction.

Cameron LNG's export plant in Louisiana, however, has remained shut since Aug. 27 due to lingering power outages from Laura. Some analysts say the plant could remain shut through mid October.