NEW YORK: US natural gas futures were little changed on Tuesday with the market taking a break after collapsing 10% to a one-month low on Monday on forecasts for milder weather and less heating demand next week and a continued increase in output.
The price drop came despite record high liquefied natural gas exports so far this month.
Front-month gas futures rose 0.5 cents, or 0.2%, to $2.702 per million British thermal units at 8:55 a.m. EST (1355 GMT). On Monday, the contract settled at its lowest since October 14.
Data provider Refinitiv said output in the Lower 48 US states averaged 89.5 billion cubic feet per day (bcfd) so far in November, up from a five-month low of 87.4 bcfd in October. That, however, was still well below the all-time monthly high of 95.4 bcfd in November 2019.
Traders said some of that gas output increase was due to higher oil prices. Oil futures are up about 14% this month on hopes global energy demand and economic activity will rise now that promising coronavirus vaccines are in the works. Those higher oil prices encouraged energy firms to drill for more crude. A lot of associated gas comes out of those oil wells.
With unseasonably warm weather coming, Refinitiv projected demand, including exports, would drop from 104.3 bcfd this week to 99.6 bcfd next week. The forecast for next week, however, was higher than Refinitiv projected on Monday.
The amount of gas flowing to US LNG export plants averaged 10.0 bcfd so far in November, up from a five-month high of 7.7 bcfd in October, as rising prices in Europe and Asia in recent months have prompted global buyers to purchase more US gas.