US Natgas Prices Rise on Higher Demand Forecasts and Pipeline Issues
US natural gas futures climbed near a one-week high on Monday, driven by revised demand forecasts and a decline in daily output due to a pipeline issue in Kentucky. Energy traders noted that prices were also supported by increased flows to liquefied natural gas (LNG) export plants, particularly with the expected return of a liquefaction train at Freeport LNG’s facility in Texas.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 1.3 cents, or 0.4 percent, to USD3.048 per million British thermal units (mmBtu). This marked the contract’s highest close since September 25 for the second consecutive day. The market showed little concern about winter gas supplies, as the premium of December futures over November fell to a record low of around 28 cents per mmBtu.
Average gas output in the US Lower 48 states dropped to 111.7 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 bcfd in August and September. Daily output was on track to fall further to a four-month low of 109.3 bcfd on Monday, partly due to problems with a pipeline in Kentucky. Canadian energy company Enbridge’s Texas Eastern Transmission (TETCo) unit declared a force majeure due to an unplanned outage, with an unclear restoration timeline.
Record output and mild spring weather had allowed energy firms to maintain gas inventories above the five-year average since March, peaking at 7.7 percent above normal in April. However, a hot summer reduced this surplus, with estimates suggesting inventories slid to 1.8 percent above normal during the week ended October 2. Meteorologists predicted near-normal weather through October 20, which should keep both heating and cooling demand low.
LSEG forecasted average gas demand in the Lower 48 states, including exports, to hold around 106.2 bcfd this week and next, higher than previously expected. Average gas flows to the nine large US LNG export plants fell to 16.9 bcfd so far in October, down from 17.9 bcfd in September. However, daily LNG feedgas was on track to rise to a one-week high of 17.6 bcfd on Monday, with increased flows to Freeport LNG in Texas.