NEW YORK: US natural gas futures climbed about 2 percent on Thursday on a smaller-than-expected storage build, a drop in daily output to a five-month low and forecasts for higher demand over the next two weeks than previously expected.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 6.4 cents, or 2 percent, to USD3.262 per million British thermal units.
The US Energy Information Administration (EIA) said energy firms added a smaller-than-expected 67 billion cubic feet (bcf) of gas to storage during the week ended October 9.
That compares with the 76-bcf build analysts forecast in a Reuters poll and an increase of 80 bcf during the same week last year and a five-year (2021-2025) average increase of 90 bcf for the period.
Analysts had predicted last week’s storage injection would be smaller than usual due to recent declines in daily output.
Financial firm LSEG said average gas output in the US Lower 48 states slid from record highs of 113.3 bcfd in August and September to 110.7 bcfd so far in October.
That drop in output so far in October was due to a combination of Gulf of Mexico shut-ins from Hurricane Isaias and force majeure incidents and other problems on pipelines in Kentucky, Texas, West Virginia and elsewhere in recent weeks.
On a daily basis, output was on track to drop to a five-month low of 108.8 bcfd due in part to another pipeline force majeure in West Virginia on Wednesday.
Record output and mild spring weather earlier this year allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7 percent above normal in April.
Energy firms had to pull lots of gas out of storage during the hot summer months to fuel power plants needed to keep air conditioners humming, cutting the inventory surplus. About 40 percent of US power generation comes from gas-fired plants.
Looking forward, meteorologists predicted that weather across the country would remain mostly milder than normal through October 30, which should keep both heating and cooling demand low.
With seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, will rise from 104.7 bcfd this week to 106.0 bcfd next week. Those forecasts were higher than LSEG’s outlook on Wednesday.
Average gas flows to the nine major US LNG export plants fell to 17.6 bcfd so far in October, down from 17.9 bcfd in September and a monthly record high of 18.8 bcfd in April.