NEW YORK: US natural gas futures held near a one-week high on Monday on forecasts for more demand over the next two weeks than previously expected and a decline in daily output due to a pipeline problem in Kentucky.
Energy traders also noted that prices were supported by an increase in flows to liquefied natural gas export plants with the expected return of a liquefaction train at Freeport LNG’s facility in Texas.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 1.3 cents, or 0.4 percent, to USD3.048 per million British thermal units (mmBtu), putting the contract on track for its highest close since September 25 for a second day in a row.
In a sign the market is not too worried about gas supplies this winter, the premium of futures for December over November fell to a record low of around 28 cents per mmBtu.
Financial firm LSEG said average gas output in the US Lower 48 states slid to 111.7 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 in both August and September.
On a daily basis, output was on track to fall even further to a four-month low of 109.3 bcfd on Monday due in part to problems with a pipeline in Kentucky.
On Friday, Canadian energy company Enbridge’s Texas Eastern Transmission (TETCo) unit declared a force majeure due to an unplanned outage north of the Tompkinsville compressor station in Kentucky. TETCo said the estimated time of restoration was unclear.
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 7.7 percent above normal in April.
A hot summer, however, forced energy firms to pull lots of gas out of storage to fuel the power plants needed to keep air conditioners humming, cutting the inventory surplus. About 40 of US power generation comes from gas-fired plants.
With the weather still warmer than normal last week, the amount of gas in storage likely slid to 1.8 percent above normal during the week ended October 2, down from 2.4 percent above normal in the previous week, according to analyst estimates ahead of Thursday’s weekly federal inventory report.
Looking forward, meteorologists predicted weather across the country would remain mostly near normal through October 20, which should keep both heating and cooling demand low.
LSEG said average gas demand in the Lower 48 states, including exports, will hold around 106.2 bcfd this week and next. Those forecasts were higher than LSEG’s outlook on Friday.
Average gas flows to the nine large US LNG export plants fell to 16.9 bcfd so far in October, down from 17.9 bcfd in September and the monthly record high of 18.8 bcfd in April.
On a daily basis, however, LNG feedgas was on track to rise to a one-week high of 17.6 bcfd on Monday with the amount of gas flowing to Freeport LNG in Texas expected to rise.
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