NEW YORK: US natural gas futures slid 2 percent on Tuesday on forecasts for less demand this week than previously expected and the market’s belief that daily output will soon rise after the Mountaineer XPress pipe in West Virginia returned to service last weekend.
On its first day as the front month, gas futures for November delivery on the New York Mercantile Exchange fell 6.3 cents, or 2.0percent, from where the November contract closed on Monday to USD3.043 per million British thermal units (mmBtu) on Tuesday.
Financial firm LSEG said average gas output in the US Lower 48 states has eased to 112.2 billion cubic feet per day (bcfd) so far in September, down from a monthly record high of 112.3 bcfd in August.
Over the past week, however, output has averaged a much lower 109.4 bcfd, due in part to the force majeure Canadian energy firm TC Energy’s Columbia Gas Transmission unit declared on the Mountaineer XPress pipe on September 24.
Columbia Gas Transmission lifted the force majeure on September 27 after fixing a mechanical issue that affected around 1.4 bcfd to 1.8 bcfd of gas flows.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7percent above normal in April.
But hotter-than-normal weather over the summer forced energy firms to pull lots of gas from storage to fuel power plants needed to keep air conditioners humming, cutting the inventory surplus. About 40percent of US power generation comes from gas-fired plants.
With the weather still hotter than normal, analysts predicted the amount of gas in storage slid to 2.4percent above normal during the week ended September 25, down from 2.9percent above normal in the previous week, according to estimates ahead of Thursday’s weekly federal inventory report.
Looking forward, however, meteorologists predicted average weather across the country will remain mostly near normal through October 14.
LSEG said average gas demand in the Lower 48 states, including exports, will rise from 102.6 bcfd this week to 105.1 bcfd next week as the weather turns seasonally cooler. The forecast for this week was lower than LSEG’s outlook on Monday.
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