US natgas hits 9-week high on cooler forecast, record exports

US natural gas futures climbed to a nine-week high on Friday on forecasts for cooler weather and higher heating demand over the next two weeks than previously expected, record exports and a small decline in output.

Front-month gas futures rose 3.9 cents, or 1.3%, to $2.950 per million British thermal units at 8:51 a.m. EDT (1251 GMT), putting the contract on track for its highest close since Feb. 22.

That kept the front-month in overbought territory with a Relative Strength Index (RSI) over 70 for a fifth day in a row for the first time since August 2020.

For the week, the contract was about 8% higher, putting it up for a third week in a row for the first time since February.

For the month, the contract was up about 13% after falling around 6% last month.

Data provider Refinitiv said gas output in the Lower 48 US states slipped to an average of 91.3 billion cubic feet per day (bcfd) so far in April from 91.5 bcfd in March due to routine spring pipeline maintenance. That compares with a record monthly high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would slide from 89.5 bcfd this week to 87.5 bcfd next week and 86.0 bcfd as the weather turns seasonally milder. The forecast for next week was slightly higher than Refinitiv estimated on Thursday.

The amount of gas flowing to US LNG export plants averaged 11.5 bcfd so far in April, putting it on track to top the monthly record of 11.2 bcfd in March.

Buyers around the world continue to purchase record amounts of US gas because prices in Europe and Asia remain high enough to cover the cost of buying and transporting the US fuel across the ocean.

Traders, however, said that US LNG exports cannot rise much more until new units enter service in 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants pull in a little more gas than they export because some of the fuel is used to run the facility.

US pipeline exports to Mexico, meanwhile, averaged 6.1 bcfd so far in April, up from 5.9 bcfd in March and on track to top the monthly record of 6.0 bcfd in September 2020, Refinitiv data shows.