U.S. natural gas futures slid about 2% to a one-week low on Monday on expectations Hurricane Milton will cut the amount of gas power generators need to burn later this week by knocking out electricity service to potentially millions of homes and businesses in Florida.
The U.S. National Hurricane Center projected Milton will slam into the west coast of Florida as a major storm late on Wednesday before sweeping across the central part of the state on Thursday.
Those Florida outages will add to the almost 300,000 homes and businesses still without power in the Carolinas and Georgia since Hurricane Helene moved inland after slamming into Florida on Sept. 26.
Front-month gas futures NGc1 for November delivery on the New York Mercantile Exchange fell 6.5 cents, or 2.3%, to $2.789 per million British thermal units (mmBtu) at 9:26 a.m. EDT (1326 GMT), putting the contract on track for its lowest close since Sept. 26.
But with gas futures up in five of the past six weeks, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for a fifth week in a row to their highest since June, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
One factor that has supported prices in recent weeks, the front-month has gained about 41% over the past six weeks, was a drop in the amount of fuel utilities have injected into storage for the 2024-2025 winter heating season.
Storage builds in July, August and September were at record lows, according to federal energy data going back to 1997.
That’s because many producers reduced their drilling activities so far this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low in March.
Even though storage injections have been lower than usual in 20 of the past 21 weeks, the amount of gas in inventory was still about 5% above normal levels for this time of year due to low heating demand during the mild winter of 2023-2024.
SUPPLY AND DEMAND
Financial company LSEG said average gas output in the Lower 48 U.S. states fell to 101.0 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September. That compares with a record 105.5 bcfd in December 2023.
LSEG forecast average gas demand in the Lower 48, including exports, will ease from 96.4 bcfd this week to 96.2 bcfd next week. Those forecasts were higher than LSEG’s outlook on Friday.
Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants fell to an average of 12.2 bcfd so far in October, down from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.
That reduction was due mostly to the planned Sept. 20 shutdown of Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland for around three weeks of annual maintenance, which will likely end later this week.
Source: Reuters (Reporting by Scott DiSavino; Editing by Emelia Sithole-Matarise)