NEW YORK: US natural gas futures slid about 2 percent on Monday on an increase in daily output, ample amounts of fuel in storage and forecasts for mild weather and less demand over the next two weeks than previously expected.
On its first day as the front-month, gas futures for November delivery on the New York Mercantile Exchange fell 5.1 cents, or 1.6 percent, from where the November contract closed on Friday to USD3.155 per million British thermal units (mmBtu).
But, the front-month was still on track to close at its highest since July 22 since the higher-priced November contract was still up about 11percent from where the lower-priced October contract closed on Friday when it was the front-month.
Looking forward, the premium of futures for December over November rose to a record high of around 7 cents per mmBtu. In the cash market, prices at the Waha Hub in West Texas and the AECO Hub in Alberta remained in negative territory because pipelines in both regions were constrained by expected and unexpected maintenance work.
For the Waha, that was the fourth day in a row and the 13th time this year that prices were in negative territory. For AECO, that was the fifth day in a row that prices were below zero, with each day setting a fresh record low, according to LSEG pricing data.
In the tropics, the US National Hurricane Center projected both Hurricane Humberto (between Bermuda and the Bahamas) and Tropical Storm Imelda (over the Bahamas) would move northeast over the next week, remaining well away from the US East Coast.
Even though storms can boost gas prices by cutting output along the US Gulf Coast, they are more likely to reduce prices by shutting LNG export plants and knocking out power to homes and businesses. About 40percent of the power generated in the US comes from gas-fired plants.
Financial firm LSEG said average gas output in the Lower 48 states fell to 107.5 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.
On a daily basis, however, output was on track to rise to a preliminary three-week high of 108.4 bcfd on Sunday. That compares with an all-time daily high of 109.7 bcfd on July 28. Preliminary data is often revised later in the day.
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