US natural gas futures rose almost 4% to a fresh seven-week high on Wednesday on forecasts for the weather to remain warmer than normal in Texas and the Southeast through mid September despite projections for slightly lower cooling demand next week than previously expected. Front-month gas futures for October delivery on the New York Mercantile Exchange rose 8.7 cents, or 3.7%, to settle at $2.445 per million British thermal units, their highest close since July 12.
That kept the contract in overbought territory for a second day in a row for the first time since November 2018. The increase in US prices also pushed next-day gas at the Henry Hub benchmark in Louisiana over Britain's day-ahead National Balancing Point (NBP) for the first time since January 2018.
Traders, however, noted the LNG market looks at prices two or more months in the future since many buyers of US LNG have to give suppliers about two months notice before cancelling a cargo. NBP prices for November were still trading about $2.60 per mmBtu over Henry Hub futures for November. The US National Weather Service projected temperatures would remain well above normal in Texas and the Southeast in both its 6-10 day and 8-14 day outlooks.
Despite the warm forecasts, data provider Refinitiv cut its projection for average gas demand in the Lower 48 US states next week from 86.4 billion cubic feet per day (bcfd) on Tuesday to 85.5 bcfd on Wednesday with power generators expected to burn less fuel to meet lower air conditioning use.
That compares with a demand forecast of 88.0 bcfd during the warmer weather this week.
In the Atlantic, in the wake of Hurricane Dorian on Wednesday the wreckage of pulverized homes, beached boats and floodwaters covered miles of the Bahamas, as the storm heads for Florida and Georgia.
Since Dorian started lashing Florida's east coast over the past few days, it has knocked power out to over 150,000 customers in NextEra Energy Inc's FPL territory. Total customer outages at any given time, however, only reached about 11,000, FPL said.
Kinder Morgan Inc said it halted the startup process of its liquefaction facility at Elba Island in Georgia following mandatory evacuation orders as Dorian approached.
Gas flows to US LNG export plants, meanwhile, slipped to a near two-week low of 5.8 bcfd on Tuesday due to planned maintenance on Train 5 at Cheniere Energy Inc's Sabine Pass facility in Louisiana, down from a record high of 6.8 bcfd last week.
Freeport LNG, meanwhile, shipped the first cargo from its Freeport export facility in Texas on the LNG Jurojin tanker on Tuesday.
Gas production in the Lower 48 states, meanwhile, slipped to 92.6 bcfd on Tuesday from 92.8 bcfd on Monday, according to Refinitiv. That compares with an all-time high of 93.0 bcfd on Aug. 19.
Analysts said utilities likely added 78 billion cubic feet (bcf) of gas into storage during the week ended Aug. 30. That compares with an injection of 64 bcf during the same week last year and a five-year (2014-18) average build of 66 bcf for the period.
If correct, last week's increase would boost stockpiles to 2.935 tcf, 2.9% below the five-year average of 3.023 tcf for this time of year. The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production expected to keep growing, analysts said, stockpiles should reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on October 31.
Comments
Comments are closed.