NEW YORK: US natural gas futures held steady on Tuesday as bearish forecasts for milder weather and less demand over the next two weeks than previously expected offset a bullish drop in daily output to an eight-month low.
Front-month gas futures for November delivery on the New York Mercantile Exchange (NYMEX) rose 0.2 cent, or 0.1 percent, to USD3.169 per million British thermal units.
Financial firm LSEG said average gas output in the US Lower 48 states slid from record highs of 113.3 bcfd in August and September to 110.6 bcfd so far in October.
That drop in average output so far in October was due to a combination of Hurricane Isaias production shut-ins and force majeure incidents and problems on pipelines in Kentucky, Texas, West Virginia and elsewhere over the past month or so.
On a daily basis, LSEG said output was on track to drop to an eight-month low of around 107.1 bcfd on Tuesday, even as production slowly returns in the Gulf of Mexico after Isaias.
The US Marine Minerals Administration, which oversees development of offshore energy, said just about 25 percent or 0.5 bcfd of offshore Gulf of Mexico gas was still shut-in on Monday, down from a peak of 59 percent or 1.3 bcfd shut-in on October 9 when Isaias crashed into the Florida Panhandle.
With seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, will rise from 103.9 bcfd this week to 106.1 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
Average gas flows to the nine major US LNG export plants fell to 17.4 bcfd so far in October, down from 17.9 bcfd in September and a monthly record high of 18.8 bcfd in April.
Around the world, gas traded at USD28 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe, a 45-month high, and USD26 at the Japan-Korea Marker benchmark in Asia.
Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Prices in the US, however, have not reacted much to the war in Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
No matter how high global gas prices go, the US cannot export much more LNG until units under construction enter service in coming months and years.
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