US natgas up to highest since August as Hurricane Delta shuts output

US natural gas futures edged up on Thursday to their highest since August, as the Gulf of Mexico braced for Hurricane Delta's arrival and the market focused more on production declines than on lower gas flows to the region's liquefied natural gas (LNG) export plants.

Delta was expected to slam into Louisiana on Friday with winds over 100 miles per hour (161 kph).

Traders noted that prices fell early in the session, then turned positive following a report showing an expected, below-normal storage build last week that keeps inventories on track to reach a record high by the end of October.

The US Energy Information Administration said utilities injected 75 billion cubic feet (bcf) of gas into storage in the week ended Oct. 2.

That is in line with the 73-bcf build analysts forecast in a Reuters poll and compares with an increase of 102 bcf during the same week last year and a five-year (2015-19) average build of 86 bcf.

Front-month gas futures rose 2.1 cents, or 0.8%, to settle at $2.627 per million British thermal units, their highest since Aug. 31.

Data provider Refinitiv said output in the Lower 48 US states was on track to drop from a 26-month low of 84.1 billion cubic feet per day (bcfd) on Wednesday to a preliminary 83.3 bcfd on Thursday as Gulf Coast producers shut wells.

The US Bureau of Safety and Environmental Enforcement said energy firms shut 1.7 bcfd, or 62%, of offshore Gulf of Mexico gas production.

In Louisiana, Cameron LNG said it would shut its LNG export plant, while Cheniere Energy Inc reduced gas flows to its Sabine Pass facility but planned to keep it operating with a small "ride-out" crew.

With LNG exports declining, Refinitiv projected demand would slip from 86.9 bcfd this week to 85.5 bcfd next week.