US natural gas prices climb on lower output and higher LNG exports
US natural gas futures climbed to a fresh one-week high on Tuesday, driven by lower output due to pipeline issues and increased flows to liquefied natural gas (LNG) export plants. The front-month gas futures for November delivery on the New York Mercantile Exchange rose 1.9 cents, or 0.6 percent, to USD3.085 per million British thermal units (mmBtu), marking the highest close since September 25 for the third consecutive day.
Despite the rise, the market showed little concern about winter gas supplies, as the premium of December futures over November dropped to a record low of around 28 cents per mmBtu. In the US West, extreme heat and heavy air conditioning usage pushed next-day power prices at the South Path-15 (SP-15) hub in Southern California up 10 percent to a 28-month high of around USD87 per megawatt hour. This compares with an average of USD24 in 2026, USD28 in 2025, and USD53 over the past five years.
High temperatures in Los Angeles were expected to exceed 100 degrees Fahrenheit (37.8 degrees Celsius) for a fifth consecutive day. Meanwhile, the US National Hurricane Center indicated a 90 percent chance of a cyclone forming in the Gulf of Mexico within seven days. While storms can boost gas prices by cutting output, they are more likely to reduce prices by shutting LNG export plants and disrupting power supply.
Financial firm LSEG reported that average gas output in the US Lower 48 states fell to 111.7 billion cubic feet per day (bcfd) in October, down from record highs of 113.3 bcfd in August and September. Daily output was projected to drop further to a four-month low of 108.9 bcfd on Tuesday due to pipeline issues. LSEG also forecasted that average gas demand, including exports, would decrease from 106.3 bcfd this week to 104.5 bcfd next week.
Average gas flows to the nine large US LNG export plants declined to 16.9 bcfd in October, down from 17.9 bcfd in September and the monthly record high of 18.8 bcfd in April. However, daily LNG feedgas was expected to rise to a one-week high of 17.6 bcfd on Tuesday, with increased flows to Freeport LNG in Texas.