NEW YORK: US natural gas futures edged lower on Friday as traders locked in profits ahead of the weekend after prices climbed to a more than one-month high in the previous session, though the contract logged a third consecutive weekly gain on forecasts for warmer weather.
On its first day as the front-month, gas futures for October delivery on the New York Mercantile Exchange (NYMEX) fell 2.6 cents, or 0.9percent, to settle at USD2.888 per million British thermal units (mmBtu). The front-month contract posted a weekly gain of 4.2percent.
“There’s just some sell-side interest after the big price response we’ve seen this week. So probably a little repositioning or profit taking ahead of the weekend,” said Robert DiDona, president of Energy Ventures Analysis.
“We don’t expect this to turn into a larger sell-off. If anything, we might see some bid interest come back in towards the end of the day and push this price back towards a break-even level,” added DiDona.
Meteorologists forecast mostly warmer-than-normal temperatures through September 11, as Cooling Degree Days stood at 208 on Friday, compared with 112 during the same period last year. CDDs measure energy demand to cool buildings.
The US Energy Information Administration (EIA) on Thursday said energy firms added 15 billion cubic feet (bcf) of gas to storage during the week ended August 21.
That figure was lower than the 20-bcf build analysts forecast in a Reuters poll and compares with an injection of 17 bcf during the same week a year ago and an average increase for that week of 33 bcf over the past five years (2021-2025). In the prior week ended August 14, energy firms added 16 bcf of gas to storage.
Demand for US natural gas from LNG export plants rose to the highest level since late April on Thursday as major Texas facilities like Cheniere Energy’s Corpus Christi plant and Freeport LNG returned to service from maintenance, according to preliminary data from LSEG.
Financial group LSEG said average gas output in the US Lower 48 states has reached 111.4 billion cubic feet per day so far in August, up from a monthly record high of 110.7 bcfd in July.
Average gas flows to the nine big US LNG export plants stand at 17.2 bcfd so far in August, little changed from 17.2 bcfd in July and a monthly record high of 17.4 bcfd in June.
LSEG projected average gas demand in the Lower 48 states, including exports, would slip from 112.7 bcfd this week to 111.1 bcfd next week.
“Looking ahead, we continue to see the potential for a milder winter this year given the prospects of a very strong El Nino,” analysts at J.P. Morgan said in a note.
Elsewhere, Benchmark Dutch and British wholesale gas prices firmed amid a lack of diplomacy between the United States and Iran to support an opening of the Strait of Hormuz and rising concerns over European winter gas supply.