NEW YORK: US natural gas futures edged up to a three-month high on Wednesday on forecasts for more demand over the next two weeks than previously expected, a drop 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 3.2 cents, or 0.9percent, to USD3.506 per million British thermal units (mmBtu) by 8:52 a.m. EDT (1252 GMT), putting the contract on track for its highest close since July 18.
In the tropics, the US National Hurricane Center projected Tropical Storm Melissa would strengthen into a hurricane on Friday as it slowly heads north across the Caribbean Sea toward Jamaica. 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 40 percent 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.
Meteorologists forecast temperatures across the country would remain mostly near-normal through November 6.
With the weather turning seasonally colder, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.1 bcfd this week to 105.9 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.
The average amount of gas flowing to the eight big US LNG export plants rose to 16.5 bcfd so far in October, up from 15.7 bcfd in September and a monthly record high of 16.0 bcfd in April. The United States 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.