NEW YORK: US natural gas futures climbed about 3 percent on Wednesday in volatile technical trade ahead of contract expiration, forecasts for more demand this week than previously expected, and increasing amounts of gas flowing to liquefied natural gas export plants in recent weeks.
Thank you for reading this post, don't forget to subscribe!On its last day as the front-month, gas futures for November delivery on the New York Mercantile Exchange rose 7.9 cents, or 3 percent, to USD2.776 per million British thermal units (mmBtu).
Futures for December, which will soon be the front-month, were down about 2 percent to USD3.06 per mmBtu.
In a sign the market is not too worried about supply meeting demand in coming months, the 12-month futures strip dropped to a 26-month low of USD2.84 per mmBtu.
Financial firm LSEG said average gas output in the US Lower 48 states has slid to 112.1 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 bcfd in both August and September.
On a daily basis, however, output has recovered to an average of around 113.3 bcfd over the past week.
Looking ahead, meteorologists predicted weather across the country would remain mostly milder than normal through November 12, which should keep heating demand lower than usual in coming weeks.
Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 106.4 bcfd this week to 110.3 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Tuesday, while the forecast for next week was lower.
Average gas flows to the nine major US LNG export plants has risen to 18.3 bcfd so far in October, up from 17.9 bcfd in September. That figure is still below the monthly record high of 18.8 bcfd in April.
On a daily basis, meanwhile, LNG feedgas has increased to an average of around 19.1 bcfd over the past two weeks.
Demand for US gas is high around the world due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Gas was trading near 46-month highs of around USD32 per mmBtu at both the Dutch Title Transfer Facility benchmark in Europe and the Japan-Korea Marker benchmark in Asia.
US gas prices, however, have not reacted much to the conflicts in Ukraine and Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
As a result, no matter how high global gas prices go, the US cannot send more LNG to the rest of the world until new liquefaction units under construction in the US enter service in coming months and years.
