U.S. natural gas futures eased about 1% on Tuesday after the long U.S. Labor Day holiday weekend on forecasts for less hot weather than previously expected, which should reduce the amount of gas power generators burn to keep air conditioners humming.
That small price decline came despite a bullish drop in output in recent days and rising gas flows to liquefied natural gas export terminals.
Another factor that has weighed on gas prices for much of this year was the tremendous oversupply of fuel left in storage after a mild winter.
There was still about 12% more gas in storage than normal for this time of year, even though injections have been smaller than usual in 15 of the past 16 weeks after extremely low prices in the spring prompted several producers to cut output.
Front-month gas futures NGc1 for October delivery on the New York Mercantile Exchange fell 1.9 cents, or 0.9%, to $2.108 per million British thermal units (mmBtu) at 9:28 a.m. EDT (1328 GMT).
Even though gas futures were up about 5% last week, speculators cut their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for the first time in three weeks to their lowest since July, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states slid to an average of 102.3 billion cubic feet per day (bcfd) so far in September, down from 103.2 bcfd in August.
Meteorologists forecast weather across the country would remain mostly near normal through Sept. 11 before turning warmer than normal from Sept 12-18. Energy traders, however, noted that warmer-than-normal weather in mid-September would only average around 75 degrees F (23.9 degrees Celsius), down from an average of 79 F (26.1 C) in mid-August.
LSEG forecast average gas demand in the Lower 48, including exports, will fall from 102.8 bcfd this week to 101.1 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Friday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in September, up from 12.9 bcfd in August. That compares with a monthly record high of 14.7 bcfd in December 2023.
Looking ahead, Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland will likely shut for about three weeks of routine annual maintenance around Sept. 20, according to the plant’s history and notices to customers.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
Gas prices were trading around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $14 at the Japan Korea Marker (JKM) benchmark in Asia JKMc1.
Source: Reuters (Reporting by Scott DiSavino; editing by Jonathan Oatis)