NEW YORK: US natural gas futures soared close to a seven-year high on Monday as record global gas prices kept demand for US liquefied natural gas (LNG) exports strong. Traders noted US prices increased despite forecasts for milder weather and lower demand next week than previously expected.
On its second to last day as the front-month, gas futures for October delivery rose 31.4 cents, or 6.1%, to $5.454 per million British thermal units (mmBtu) at 9:03 a.m. EDT (1303 GMT), putting the contract on track to close at its highest levels since Sept. 15 when it hit a seven-year high of $5.46.
November futures, which will soon be the front-month, were up 32 cents to $5.52 per mmBtu.
Even though the front-month is rising toward a seven-year high, gas speculators last week cut their net long positions on the New York Mercantile and Intercontinental Exchanges for a second week in row to their lowest since May in anticipation US prices could drop later this week if US utilities keep adding more gas to storage than usual, according to data from the Commodity Futures Trading Commission (CFTC).
US utilities injected more gas than usual into stockpiles over the past two weeks and were expected to do so again in the latest inventory report, cutting the deficit to the five-year (2016-2020) average from about 6.9% to about 6.5%. That compares with massive deficits of over 20% in some European countries, according to analysts, which is one of the biggest reasons why prices in Europe are at record levels.
Data provider Refinitiv said gas output in the US Lower 48 states fell to an average of 90.8 billion cubic feet per day (bcfd) so far in September from 92.0 bcfd in August, due mostly to Hurricane Ida-related losses along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019.
With the coming of cooler weather, Refinitiv projected average US gas demand, including exports, would rise from 82.6 bcfd this week to 83.3 bcfd next week as consumer start to heat their homes and businesses. Next week's forecast, however, was lower than Refinitiv projected on Friday.
With gas prices at or near record highs of around $26 per mmBtu in Europe and $28 in Asia versus just over $5 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States could produce.
Despite reductions at several plants this month, the amount of gas flowing to US LNG export plants slipped modestly to an average of 10.4 bcfd so far in September from 10.5 bcfd in August, according to Refinitiv.