U.S. natural gas futures eased about 1% on Friday on ample amounts of gas in storage and forecasts for steady demand over the next two weeks.

On its last day as the front month, gas futures for October delivery on the New York Mercantile Exchange fell 1.7 cents, or 0.6%, to $2.887 per million British thermal units. On Thursday, the contract closed at its highest level since September 18.

For the week, the contract was down about 1% after falling by 2% last week and 4% two weeks ago.

Futures for November (NGX25), which will soon be the front month, were down about 1% to $3.18 per mmBtu.

In the cash market, prices at the Waha Hub in West Texas and the AECO Hub in Alberta remained in negative territory because pipelines in both regions were constrained by expected and unexpected maintenance work.

For the Waha, that was the third time this week and the 12th time this year that prices were in negative territory. For AECO, this week was the first time average prices dropped into negative territory, doing so four times with each day setting a fresh record low, according to LSEG pricing data.

In the tropics, the U.S. National Hurricane Center projected Hurricane Humberto would strengthen into a major hurricane as it moves west and then northwest through the Atlantic Ocean between Puerto Rico and Bermuda without hitting land over the next week.

The NHC also said a tropical wave near the Bahamas had a 90% chance of strengthening into a tropical cyclone over the next seven days.

Neither system was expected to enter the Gulf of Mexico at this time, but meteorologists at AccuWeather said the U.S. Southeast could experience tropical rain and wind early next week.

Even though storms can boost gas prices by cutting output along the U.S. Gulf Coast, they are more likely to reduce prices by shutting LNG export plants and knocking out power to homes and businesses. About 40% of the power generated in the U.S. comes from gas-fired plants.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.4 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 fall to a preliminary 11-week low of 106.3 bcfd on Friday. That compares with an all-time daily high of 109.7 bcfd on July 28. Preliminary data is often revised later in the day.

Record output earlier this year allowed energy companies to inject more gas into storage than usual so far this summer. There was about 6% more gas in storage than normal for this time of year.

Meteorologists forecast the weather will remain mostly warmer than normal through at least October 11.

That late season heat will likely reduce gas demand by cutting the amount of fuel used to heat homes and businesses by more than the amount of gas power generators burn to keep air conditioners humming.

LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 105.7 bcfd this week to 102.9 bcfd next week and 100.3 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 eased to 15.7 bcfd so far in September, down from 15.8 bcfd in August. That compares with a monthly record high of 16.0 bcfd in April.
Source: Reuters