US natgas prices rise to one-week high on lower output, heat
NEW YORK: US natural gas futures edged up to a one-week high on Tuesday on a drop in daily output and forecasts for the weather to remain warmer than normal through the end of September, keeping the amount of gas burned to produce power for air conditioning higher than usual for at least a couple more weeks.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 3.9 cents, or 1.3percent, to USD2.935 per million British thermal units, putting the contract on track for its highest close since September 4.
Financial firm LSEG said average gas output in the US Lower 48 states has risen to 113.2 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
On a daily basis, however, output was on track to drop to a two-month low of 108.4 bcfd on Tuesday.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March.
But with hotter-than-normal weather last week, analysts said the amount of gas in storage likely slid to 3.6percent above normal during the week ended September 11, down from 4.8percent above normal in the previous week, according to estimates ahead of Thursday’s weekly federal inventory report.
Meteorologists forecast weather would remain mostly warmer through September 30, with power generators burning more gas than usual to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants.
LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 108.4 bcfd this week to 106.1 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
Average gas flows to the nine big US LNG export plants have risen to 18.3 bcfd so far in September, up from 17.2 bcfd in August, but remained short of the monthly record high of 18.8 bcfd in April.
On a daily basis, LNG feedgas was on track to fall to a three-week low of 17.7 bcfd on Tuesday.
US energy firm Berkshire Hathaway Energy, meanwhile, has told customers that it plans to shut its 0.8-bcfd Cove Point LNG export plant in Maryland for a couple of weeks of annual maintenance starting around September 19.
The US became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost US gas.
Around the world, gas traded near 44-month highs of around USD27 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and USD25 at the Japan-Korea Marker benchmark in Asia.
Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Prices in the US have not reacted much to the war in Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
No matter how high global gas prices go, the US cannot export much more LNG until units under construction enter service in the coming months and years.