U.S. natgas futures rose 3% on November contract expiry on higher demand forecasts, as the 12-month strip fell to a 26-month low of $2.84/MMBtu.
(P&GJ) — U.S. natural gas futures rose about 3% on Wednesday in volatile trading ahead of contract expiration, on forecasts for more demand this week than previously expected and rising gas flows to LNG export plants in recent weeks.
On its last day as the front month, November futures on the New York Mercantile Exchange climbed 7.9 cents to $2.776 per million British thermal units (MMBtu). December futures, which will soon become the front month, fell about 2% to $3.06 per MMBtu.
In a sign the market is not concerned about supply meeting demand in coming months, the 12-month futures strip fell to a 26-month low of $2.84 per MMBtu.
LSEG said average gas output in the Lower 48 states has slipped to 112.1 billion cubic feet per day (Bft3d) so far in October from record highs of 113.3 Bft3d in August and September, though daily output has recovered to about 113.3 Bft3d over the past week.
Meteorologists expect mostly milder-than-normal weather through Nov. 12, limiting heating demand. Even so, LSEG forecast average Lower 48 demand, including exports, will rise from 106.4 Bft3d this week to 110.3 Bft3d next week.
Average gas flows to the nine major U.S. LNG export plants have risen to 18.3 Bft3d so far in October from 17.9 Bft3d in September, below the monthly record of 18.8 Bft3d set in April. Daily LNG feedgas has averaged about 19.1 Bft3d over the past two weeks.
Gas was trading near 46-month highs of about $32 per MMBtu at both the Dutch TTF benchmark and the Japan-Korea Marker. U.S. prices have reacted little, however, because the country produces all the gas it consumes and U.S. LNG plants are already liquefying as much gas as they can. The U.S. cannot export more LNG until new liquefaction units under construction enter service.
Analysts expect a storage injection of 68 billion cubic feet for the week ended Oct. 23, which would bring U.S. inventories to 3,712 billion cubic feet, about 0.7% above the five-year average.
