US natgas futures fall with cash prices on lower demand forecasts

US natural gas futures ended a volatile week down almost 5% on Friday as spot prices continued to trade much lower than futures on forecasts for less demand over the next two weeks than previously expected.

The decline in futures prices came despite a projected increase in LNG exports, record sales to Mexico and a drop in daily output to a 25-month low.

On its second to last day as the front-month, gas futures for October delivery fell 10.9 cents, or 4.8%, to settle at $2.139 per million British thermal units (mmBtu).

November futures, which will soon be the front-month, were down about 9 cents at $2.81 per mmBtu. If November continues to trade at that level next week, it would put the front-month on track for its highest close since November 2019.

For the week, the front-month was up about 4% after falling over 10% on Monday and rising almost 16% on Wednesday.

Next-day gas at the Henry Hub benchmark in Louisiana, which fell to a 21-year low earlier this week, has traded below front-month futures since late August due mostly to weak demand along the Gulf Coast after a series of storms hit LNG exports.

Data provider Refinitiv projected demand, including exports, would rise from 82.4 billion cubic feet per day (bcfd) this week to 84.6 bcfd next week and 85.3 bcfd in two weeks, with LNG exports expected to climb. That, however, is lower than Refinitiv's forecast on Thursday, as an expected increase in gas prices will cause some electric generators to burn more coal instead of gas to produce power.

The amount of gas flowing to LNG export plants was on track to reach 6.1 bcfd on Friday, up from a two-week low of 3.9 bcfd on Tuesday, as vessels returned to Gulf Coast terminals after Tropical Storm Beta dissipated.