NEW YORK: US natural gas futures fell about 4 percent to a one-week low on Friday on continued mild weather, forecasts for less demand this week than previously expected, and a small increase in output in recent days.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 13.4 cents, or 4 percent, to USD3.102 per million British thermal units, putting the contract on track for its lowest close since October 5.
That also put the contract down about 4 percent this week after gaining 6 percent last week.
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 110.8 bcfd so far in October. The average so far in October was slightly higher than on Thursday.
That drop in output so far in October was due to a combination of Gulf of Mexico shut-ins from Hurricane Isaias and force majeure incidents and other problems on pipelines in Kentucky, Texas, West Virginia and elsewhere in recent weeks.
With seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, will rise from 103.87 bcfd this week to 106.8 bcfd over the next two weeks. The forecast for this week was lower than LSEG’s outlook on Thursday, while the forecast for next week was higher.
Average gas flows to the nine major US LNG export plants slid to 17.6 bcfd so far in October, down from 17.9 bcfd in September and a monthly record high of 18.8 bcfd in April.
On a daily basis, LNG export feedgas was on track to rise to a five-month high of 18.9 bcfd on Friday with flows to Cheniere Energy’s 4.5-bcfd Sabine Pass plant in Louisiana at a four-month high of 4.8 bcfd and flows to the first 0.8-bcfd liquefaction train at ExxonMobil/QatarEnergy’s Golden Pass plant in Texas up to a record 0.7 bcfd.
LNG export plants often pull in more gas than they can turn into LNG since they use some of that gas to fuel liquefaction and other equipment.
Around the world, gas traded at 45-month highs of USD29 per mmBtu at both the Dutch Title Transfer Facility benchmark in Europe and 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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