US natgas futures ease on record production, less cold forecasts

• Speculators last week cut their long positions on the NYMEX to their lowest since January 2009 after stockpiles returned to normal levels for the first time in over two years.
• Refinitiv projected average gas demand in the Lower 48 states, including exports, would only rise to 92.6 billion cubic feet per day (bcfd) next week.

US natural gas futures eased as production rose to a record high and forecasts for lower than previously expected heating demand next week.

Front-month gas futures for November delivery on the New York Mercantile Exchange were down 3.2 cents, or 1.4%, to $2.288 per million British thermal units at 8:40 a.m. EDT (1240 GMT).

Speculators last week cut their long positions on the NYMEX to their lowest since January 2009 after stockpiles returned to normal levels for the first time in over two years.

Over the next 6-14 days, the US National Weather Service forecast temperatures in the Lower 48 US states would remain colder than usual over most of the country except for a patch of warm in the Southeast - just not as cold as previously expected.

Refinitiv projected average gas demand in the Lower 48 states, including exports, would only rise to 92.6 billion cubic feet per day (bcfd) next week, down from its forecast on Friday of 96.5 bcfd after meteorologists moderated their cold outlooks.

That compares with expected average demand of 86.4 bcfd during this week, which was up from Refinitiv's 85.5-bcfd forecast for the week on Friday.

Gas flows to liquefied natural gas (LNG) export plants eased to 6.8 bcfd on Sunday from 7.0 bcfd on Saturday, according to Refinitiv data. That compares with an average of 6.7 bcfd last week and a record high 7.1 bcfd on Oct. 18.

Pipeline flows to Mexico eased to a five-week low of 4.9 bcfd on Sunday from 5.0 bcfd on Saturday, according to Refinitiv data. That compares with an average of 5.2 bcfd last week and an all-time daily high of 5.9 bcfd on Sept. 18.

Analysts said utilities likely added a bigger-than-usual 91 billion cubic feet (bcf) of gas to storage during the week ended Oct. 18. That compares with an injection of 62 bcf during the same week last year and a five-year (2014-18) average build of 73 bcf for the period.

The increase during the prior week ended Oct. 11 boosted total inventories over the five-year average for this time of year for the first time since September 2017.

The increase for the week of Oct. 18 is expected to further that surplus to 3.610 trillion cubic feet, topping the five-year average of 3.578 tcf by 0.9%.

The amount of gas in inventory was as much as 33% below the five-year average in March 2019. But with production close to a record high, analysts said stockpiles should end the summer injection season above normal levels of around 3.7 tcf on Oct. 31.

Gas production in the Lower 48 states eased to 94.3 bcfd on Sunday from a record 94.4 bcfd on Saturday, according to Refinitiv data. That compares with an average of 93.8 bcfd last week.