U.S. natural gas futures edged up about 1% to a seven-week high on Tuesday on recent declines in daily output.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 4.2 cents, or 1.4%, to $3.132 per million British thermal units, putting the contract on track for its highest close since July 22.
That price increase, which pushed the contract into technically overbought territory, came despite forecasts for lower gas flows to liquefied natural gas export plants in recent days and ample supplies of gas in storage.
Financial firm LSEG said average gas output in the Lower 48 states fell to 107.5 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.
On a daily basis, output was on track to drop to a preliminary eight-week low of 106.3 bcfd on Tuesday, down from an average of 107.6 bcfd over the prior seven days. That compares with a daily record high of 109.6 bcfd on July 29.
Record output so far this year has allowed energy companies to inject more gas into storage than usual this summer. There was about 6% more gas in storage than normal for this time of the year, and analysts said they expect that percentage to grow in coming weeks.
Meteorologists forecast the weather will remain warmer than normal through at least September 24, offsetting the usual rise in heating demand that starts around this time of year. Homes and businesses burn more gas for heating during the winter than energy firms burn in power plants to produce electricity for air conditioning.
LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 100.8 bcfd this week to 103.4 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Monday.
The average amount of gas flowing to the eight big U.S. LNG export plants eased to 15.7 bcfd so far in September, down from 15.8 bcfd in August. That compares with a monthly record high of 16.0 bcfd in April.
On a daily basis, LNG export feedgas was on track to fall to a two-week low of 14.9 bcfd on Tuesday due to recent decreases at several plants, including Cheniere Energy’s 3.9-bcfd Corpus Christi in Texas and 4.5-bcfd Sabine in Louisiana, Venture Global LNG’s 1.6-bcfd Calcasieu in Louisiana and Freeport LNG’s 2.1-bcfd plant in Texas.
That compares with a daily LNG feedgas record of 17.3 bcfd on April 9.
In other LNG news, Berkshire Hathaway Energy’s 0.8-bcfd Cove Point plant in Maryland is scheduled to shut around September 15 for about a month of planned annual autumn maintenance.
Source: Reuters