U.S. natural gas futures edged up on Thursday on a decline in output so far this month and record gas flows to liquefied natural gas export plants.

That small price increase came despite a federal report showing an expected, near-normal storage build last week, ample amounts of gas in storage and forecasts for mild weather through the end of October that should keep both heating and cooling demand low.

Front-month gas futures for November delivery on the New York Mercantile Exchange were up 1.6 cents, or 0.5%, at $3.032 per million British thermal units (mmBtu) at 10:36 a.m. EDT (1436 GMT). On Wednesday, the contract closed at its lowest level since September 26 for a second day in a row.

Traders did note that the front-month slid below the psychological $3 per mmBtu level of technical support for a second straight day.

The U.S. Energy Information Administration said energy firms injected 80 billion cubic feet (bcf) of gas into storage during the week ended October 10.

That was in line with the 81-bcf build analysts forecast in a Reuters poll and compares with an increase of 77 bcf during the same week last year and an average build of 83 bcf over the past five years.

SUPPLY AND DEMAND

LSEG said average gas output in the Lower 48 states fell to 106.5 billion cubic feet per day so far in October, down from 107.4 bcfd in September and a record monthly high of 108.0 bcfd in August.

Record output earlier this year allowed energy companies to inject more gas into storage than usual. There is currently about 4% more gas in storage than normal for this time of year.

Meteorologists forecast the weather will remain mostly warmer than normal through October 31.

That late-season warmth should reduce gas demand by cutting the amount of fuel used to heat homes and businesses by more than it boosts the amount of fuel that power generators burn to keep air conditioners humming. About 40% of the power produced in the U.S. comes from burning gas.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 99.9 bcfd this week to 101.3 bcfd next week. Those forecasts were similar to LSEG’s outlook on Wednesday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.4 bcfd so far in October, up from 15.7 bcfd in September and a monthly record high of 16.0 bcfd in April.

One of the primary reasons LNG export feedgas was on track to hit an all-time high in October was the record amounts of gas flowing to Venture Global LNG’s 3.2-bcfd Plaquemines plant in Louisiana, expected to reach 3.7 bcfd on Thursday, according to LSEG data. LNG plants can pull in more gas than they can turn into LNG since they use some of it to fuel equipment.
Source: Reuters