U.S. natural gas futures fell about 5% to a nine-month low on Friday on near-record output, ample supplies of gas in storage and forecasts for the weather to remain near normal through early September.

That price drop occurred despite an increase in daily gas flows to liquefied natural gas (LNG) export plants as some units exited brief outages in recent days.

Front-month gas futures for September delivery
NG1!
on the New York Mercantile Exchange fell 12.8 cents, or 4.5%, to settle at $2.698 per million British thermal units, their lowest close since November 8.

For the week, the contract fell about 8%, putting it down for a fifth week in a row for the first time since December 2023. Futures prices have dropped by about 24% during those five weeks.

In the tropics, the U.S. National Hurricane Center projected a couple of disturbances in the Atlantic Ocean had a chance of strengthening into tropical cyclones over the next week or so, but expected none to hit the U.S. mainland during that time.

One system, however, with a 40% chance of turning into a cyclone over the next seven days, was headed west toward Barbados and other Caribbean islands. Hurricane Erin, meanwhile, was expected to weaken as it swirls northeast toward Iceland.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states has risen to 108.4 billion cubic feet per day so far in August, up from a record monthly high of 107.8 bcfd in July.

Meteorologists forecast the weather will remain mostly near normal through September 6, which is about the same as previously expected.

Despite hotter-than-usual weather earlier in the summer, record output allowed energy companies to inject more gas into storage than usual. Analysts said there was about 6% more gas in storage than normal for this time of year.

LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 111.0 bcfd this week to 106.7 bcfd next week and 104.7 bcfd in two weeks. The forecasts for this week and next were similar to LSEG’s outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 15.8 bcfd so far in August, up from 15.5 bcfd in July. That compares with a record monthly high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to rise from an average of 14.2 bcfd from Monday to Wednesday to 16.2 bcfd on Friday, with increases at several plants, including Venture Global LNG’s 1.6-bcfd Calcasieu facility in Louisiana, Cameron LNG’s 2.0-bcfd plant in Louisiana, and Freeport LNG’s 2.1-bcfd plant in Texas.

U.S. LNG exports will soar by roughly 10% a year through 2030 as energy firms double their LNG production capacity, according to analysts, providing a shot in the arm to the country’s maturing shale industry, which has seen growth slow and costs rise.
Source: Reuters