NEW YORK: US natural gas futures eased about 1percent to a two-week low on Thursday on recent declines in gas flows to liquefied natural gas (LNG) export plants and ample supplies of gas in storage.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 3.3 cents, or 1.1 percent, to USD2.996 per million British thermal units (mmBtu), putting the contract on track for its lowest close since August 28.
That price decline came ahead of the release of a federal storage report later on Thursday, which is expected to show last week’s storage build was bigger than usual for this time of year, and despite recent drops in output and forecasts for warmer weather and more demand next week than previously expected.
Analysts forecast energy firms injected 70 billion cubic feet (bcf) of gas into storage during the week ended September 5.
That figure compares with an increase of 36 bcf during the same week last year and an average build of 56 bcf over the past five years.
In the spot gas market, prices at the Waha Hub in the Permian shale in West Texas fell by 89percent to just 7 cents per mmBtu, their lowest since late May when they traded in negative territory.
Traders noted the Waha price drop was a sign that pipeline constraints, like current maintenance on Kinder Morgan’s Gulf Coast Express in Texas, were trapping gas in the Permian basin.
At the historic peak of the Atlantic hurricane season, meanwhile, the US National Hurricane Center said a disturbance near the Cape Verde Islands off the west coast of Africa had a 30 percent chance of strengthening into a tropical cyclone over the next seven days as it heads west across the ocean. The system is not expected to reach land in North America during that time.
Hurricanes, which can boost gas prices by cutting output along the US Gulf Coast, are more likely to reduce prices when they shut liquefied natural gas (LNG) export plants and knock out power to homes and businesses. About 40 percent of the power generated in the US comes from gas-fired plants.
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