US Natural Gas Prices Near One-Week High on Rising Demand Forecasts

U.S. natural gas prices held steady near a one-week high due to revised forecasts projecting higher demand over the next two weeks. This rise came amid a decrease in daily production caused by a pipeline issue in Kentucky. Energy traders also pointed to increased flows to liquefied natural gas (LNG) export plants, particularly with the anticipated return of a liquefaction unit at Freeport LNG's Texas facility.

Front-month gas futures for November delivery on the New York Mercantile Exchange climbed 1.3 cents, or 0.4%, to $3.048 per million British thermal units (MMBtu). This marked the contract's highest close since September 25 for a second consecutive day. Despite this, the premium of December futures over November fell to a record low of around 28 cents per MMBtu, indicating reduced concerns over winter gas supplies.

Average gas output in the U.S. Lower 48 states dropped to 111.7 billion cubic feet per day (Bft3d) in October, down from record highs of 113.3 Bft3d in August and September. Daily output was expected to fall further to a four-month low of 109.3 Bft3d on Monday due to the pipeline problem in Kentucky. Enbridge's Texas Eastern Transmission unit declared a force majeure after an unplanned outage, with no clear timeline for restoration.

While mild spring weather had allowed energy firms to maintain gas inventories above the five-year average, a hot summer depleted these reserves. Analysts estimated that storage levels slipped to 1.8% above normal during the week ended October 2, down from 2.4% the previous week. Looking ahead, meteorologists predicted near-normal weather through October 20, which should keep both heating and cooling demand low.

LSEG forecasted that average gas demand, including exports, would remain around 106.2 Bft3d this week and next, higher than previously expected. Meanwhile, average gas flows to U.S. LNG export plants decreased to 16.9 Bft3d in October, down from 17.9 Bft3d in September. However, daily LNG feedgas was on track to rise to a one-week high of 17.6 Bft3d on Monday, with increased flows to Freeport LNG in Texas.