NEW YORK: US natural gas futures jumped about 5% on Friday and 14% for the week to an eight-month high as lower output, rising exports, cooler weather and rising heating demand forced some traders to buy contracts in a technical short squeeze.
The magnitude of recent gains “reflects a partial unwinding of the growing short position,” analysts at energy consulting firm EBW Analytics said in a note. The US Commodity Futures Trading Commission said last week that gas speculators net short futures and options position on the New York Mercantile and Intercontinental Exchanges were the highest since March 2023. Also supporting prices, workers at US energy firm Chevron’s two liquefied natural gas (LNG) export plants in Western Australia voted to restart strikes. Australia was the world’s biggest LNG exporter in 2022, according to data from LSEG.
If those strikes reduce the amount of LNG Australia exports, global gas prices will rise, including in the US, which is on track to become the world’s biggest LNG exporter in 2023.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 17.2 cents, or 5.4%, to settle at $3.338 per million British thermal units, their highest close since Jan. 23. That kept the front-month in technically overbought territory, with a relative strength index (RSI) above 70, for a second day in a row for the first time since June.
After gaining about 11% last week and rising for four days in a row, the contract soared about 14% this week, its biggest weekly percentage increase since mid June.
Financial firm LSEG said average gas output in the lower 48 US states slid to 102.1 billion cubic feet per day (bcfd) so far in October, down from 102.9 bcfd in September and a monthly record high of 103.1 bcfd in August.
With seasonally cooler weather coming, LSEG forecast US gas demand, including exports, would rise from 94.6 bcfd this week to 95.1 bcfd next week and 96.5 bcfd in two weeks. The forecast for next week was lower than LSEG’s outlook on Thursday.
Pipeline exports to Mexico rose to an average of 7.3 bcfd so far in October, up from a record 7.2 bcfd in September, according to LSEG data.
Analysts expect exports to Mexico to rise even higher in coming months once New Fortress Energy’s plant in Altamira starts pulling in US gas to turn into liquefied natural gas (LNG) for export.
Gas flows to the seven big US LNG export plants rose to 12.8 bcfd so far in October, up from 12.6 bcfd in September, but still well below the record high of 14.0 bcfd in April.
Energy traders said they expected total LNG feedgas to rise close to record levels over the next week or so after Berkshire Hathaway Energy’s 0.8-bcfd Cove Point facility in Maryland exits a maintenance outage. Cove Point shut around Sept. 20. Analysts at LSEG have said the plant usually shuts for about three weeks of maintenance each autumn.
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