U.S. natural gas futures edged up about 1% to a five-week high on Thursday on another drop in daily output this week.

The price increase happened ahead of the release of a federal storage report later on Thursday, which is expected to show last week’s storage build was bigger than usual for this time of year due to near-record production in August.

Front-month gas futures for October delivery on the New York Mercantile Exchange were up 3.2 cents, or 1.0%, to $3.096 per million British thermal units at 8:54 a.m. EDT (1254 GMT), putting the contract on track for its highest close since July 31.

The price rise, which pushed the contract into technically overbought territory for the first time since June, put the front-month up for a seventh day in a row for the first time since February. The contract has climbed about 15% over those seven days.

Analysts forecast energy firms injected 56 billion cubic feet (bcf) of gas into storage during the week ended August 29.

That figure compares with an increase of 16 bcf during the same week last year and an average build of 36 bcf over the past five years.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states has fallen to 107.2 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 even further to a preliminary eight-week low of 105.7 bcfd on Thursday. That compares with a daily record high of 109.6 bcfd on July 28. Preliminary data, however, is often revised later in the day.

Meteorologists forecast the weather will remain mostly near normal through September 19, consistent with previous expectations.

LSEG projected average gas demand in the Lower 48 states, including exports, would decline from 104.6 bcfd this week to 102.3 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.

The average amount of gas flowing to the eight big U.S. LNG export plants has slid to 15.6 bcfd so far in September, down from 15.8 bcfd in August. This month’s figure compares with a monthly record high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to ease to 15.5 bcfd on Thursday, down from an average of 15.8 bcfd last week due to decreases at some plants, including Cheniere Energy’s 3.9-bcfd Corpus Christi facility in Texas and Venture Global LNG’s 1.6-bcfd Calcasieu facility in Louisiana. That figure compares with a daily LNG feedgas record of 17.3 bcfd on April 9.

The decline in daily LNG feedgas occurred even though flows to Venture Global LNG’s VG.N 3.2-bcfd Plaquemines plant in Louisiana rose to a record 3.3 bcfd on Wednesday. LNG plants can pull in more gas than they can convert into LNG since they use some of it to fuel liquefaction and other equipment.

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