NEW YORK: US natural gas futures jumped about 8percent to a one-week high on Monday on forecasts for much colder weather and higher heating demand over the next two weeks than previously expected and on a decline in output so far this month and near-record flows of gas to liquefied natural gas (LNG) export plants.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 24 cents, or 8.0percent, to USD3.248 per million British thermal units (mmBtu), putting the contract on track for its highest close since October 9.
In the tropics, the US National Hurricane Center projected a tropical wave in the Caribbean Sea had a 70 percent chance of strengthening into a tropical cyclone as it moves west toward Central America over the next week. The system is not expected to reach the US mainland during that time.
Even though storms can boost US gas prices by cutting output along the US Gulf Coast, they are more likely to reduce prices by shutting LNG export plants and knocking out power to homes and businesses. About 40percent of the power generated in the US comes from gas-fired plants.
LSEG said average gas output in the Lower 48 states fell to 106.6 billion cubic feet per day so far in October, down from 107.4 bcfd in September and a record monthly high of 108.0 bcfd in August.
Record output earlier this year allowed energy companies to inject more gas into storage than usual. There is currently about 4percent more gas in storage than normal for this time of year.
Over the weekend, meteorologists changed their two-week weather forecast to mostly near-normal through November 4 from mostly above-normal through November 1.
The average amount of gas flowing to the eight big US LNG export plants rose to 16.4 bcfd so far in October, up from 15.7 bcfd in September and a monthly record high of 16.0 bcfd in April.
The US became the world’s biggest LNG producer in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine. Gas was trading around USD11 per mmBtu at both the Dutch Title Transfer Facility benchmark in Europe and the Japan Korea Marker benchmark in Asia.