NEW YORK: US natural gas futures eased on Tuesday on record output and ample amounts of gas in storage.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 2.5 cents, or 0.8percent, to USD2.95 per million British thermal units. On Friday before the long US Labour Day holiday weekend, the contract closed at its highest level since July 9 for a second day in a row.
Looking ahead, the premium of futures for November over October fell to a record low of around 11 cents per mmBtu, a sign the market is not too worried about supplies meeting demand this winter.
Traders use the October-November spread to bet on winter weather forecasts and supply and demand.
October is the last month of the April-October summer cooling season when demand for gas is generally low and utilities inject gas into storage. November is the first month of the November-March winter heating season when demand for fuel is higher and utilities pull gas from storage.
It would be unusual for a summer season month like October to trade over a winter month like November.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 113.7 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
Record output and mild spring weather allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
But with hot weather last week, analysts said the amount of gas in storage likely eased to 4.3percent above normal during the week ended September 4, down from 5.3percent above normal in the previous week, according to estimates ahead of the weekly federal inventory report on Thursday.
Meteorologists forecast the weather will remain mostly warmer than normal through September 23, pushing power generators to continue burning more gas than usual to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants.
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