U.S. natural gas futures slid about 1% on Wednesday on forecasts for milder weather, lower gas demand next week than previously expected and a decline in the amount of gas flowing to liquefied natural gas (LNG) export plants due to reductions at the Freeport LNG plant in Texas.
Traders noted gas prices declined despite a drop in output this week to a five-month low.
After rising for four days in a row, front-month gas futures NGc1 for October delivery on the New York Mercantile Exchange was down 5.4 cents, or 2.0%, to $2.689 per million British thermal units (mmBtu) at 9:24 a.m. EDT (1324 GMT). On Tuesday, the contract closed at its highest price since Sept. 1.
Financial firm LSEG said average gas output in the lower 48 U.S. states has slid to 102.l billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.
Most of that decline occurred this week. On a daily basis, output was on track to drop about 3.1 bcfd over the past three days to a preliminary five-month low of 99.6 bcfd on Wednesday. Energy traders noted preliminary data is often revised later in the day.
Meteorologists forecast the weather would remain mostly near normal for the Sept. 13-21 period before turning warmer than usual from Sept. 22 through at least Sept. 28.
But with seasonally cooler weather coming, LSEG forecast U.S. gas demand, including exports, will slide from 99.9 bcfd this week to 94.9 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Tuesday.
Gas flows to the seven big U.S. LNG export plants have averaged 12.6 bcfd so far in September, up from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
On a daily basis, however, LNG feedgas fell to a preliminary two-week low of 11.4 bcfd due mostly to a reduction over the weekend at Freeport from around 1.8 bcfd last week to an average of 0.4 bcfd over the past five days, according to LSEG data.
The U.S. is on track to become the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $13 at the Japan Korea Marker (JKM) in Asia JKMc1.
Source: Reuters (Reporting by Scott DiSavino; Editing by Paul Simao)