U.S. natural gas futures slipped on Friday en route to their worst week in two months, on forecasts for demand to ease as the weather is expected to turn less hot.
Front-month gas futures NGc1 for October delivery fell 47.6 cents, or 5.1%, to settle at $8.786 per million British thermal units (mmBtu).
The front-month contract has shed about 5% this week, the biggest drop since the week of July 1.
“We’re coming into what’s called the shoulder period, when the daily demand for natural gas will start to drop as the weather gets more moderate,” said Thomas Saal, senior vice president for energy at StoneX Financial Inc.
Refinitiv projected average U.S. gas demand, including exports, would fall from 96.7 bcfd this week to 93.1 bcfd next week.
The biggest factor right now is whether there will be enough storage to meet winter demand, Saal added.
“If the weather starts to moderate, which it has started to, then the injections going forward will be a little larger … the strength of the market might wane a little bit.”
A federal report on Thursday showed U.S. utilities added 61 billion cubic feet (bcf) of gas to storage during the week ended Aug. 26, just above the 58 bcf build forecast in a Reuters poll.
The restart delay at the fire-hit Freeport liquefied natural gas (LNG) export plant in Texas leaves more fuel in the United States for utilities to refill storage.
The export plant was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut.
Meanwhile, investors took stock of an announcement from Russian energy company Gazprom which scrapped a Saturday deadline to resume flows via a major gas supply route to Europe after saying it had discovered a fault in the Nord Stream 1 pipeline during maintenance, deepening Europe’s difficulties in securing fuel for winter.
Traders also kept a close eye on the Atlantic as the hurricane season hits its peak. Tropical storms are closely watched, especially in the Gulf of Mexico, because of the threat they pose to offshore oil and natural gas production in the United States and Mexico.
Source: Reuters (Reporting by Kavya Guduru in Bengaluru Editing by Matthew Lewis)