NEW YORK: US natural gas futures fell about 1% to a seven-week low on Tuesday on record output that should enable utilities to keep injecting gas into storage through late November, instead of pulling gas out of storage to meet heating demand as usual.
US gas stockpiles were expected to rise from 6% above normal during the week ended Nov. 10 to 7% in the week ended Nov. 17, according to analysts’ estimates.
Prices drew some support from forecasts for colder weather and higher heating demand over the next two weeks, and record amounts of gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for December delivery on the New York Mercantile Exchange fell 3.6 cents, or 1.2%, to settle at $2.846 per million British thermal units (mmBtu). For the second day, the close was, their lowest since Oct. 2.
One factor keeping a lid on futures prices has been lower spot or next-day prices at the Henry Hub benchmark in Louisiana. The spot market has traded below front-month futures for 186 out of 223 trading days this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub were down about 5% to $2.49 per mmBtu for Tuesday.
Analysts have noted that so long as spot prices remain far enough below front-month futures to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.
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