NEW YORK: US natural gas futures held near a 21-month high on Tuesday on rising liquefied natural gas (LNG) exports and a drop in output as another storm targets the Gulf Coast.
Traders noted the front-month was weighed down by expectations higher prices in November will cause power generators to burn more coal and less gas to produce electricity.
On their second to last day as the front-month, gas futures for November delivery fell 0.5 cent, or 0.2%, to settle at $3.019 per million British thermal units (mmBtu). On Monday, the contract closed at its highest since January 2019.
December futures, which will soon be the front-month, meanwhile, gained about six cents to settle at $3.31 per mmBtu, which would also be the highest close since January 2019.
Data provider Refinitiv said output in the Lower 48 US states was on track to drop to 85.8 billion cubic feet per day (bcfd) on Tuesday, down about 2.9 bcfd over the last five days as Gulf Coast producers shut wells before Tropical Storm Zeta strengthens into a hurricane and hits eastern Louisiana on Wednesday.
The US Bureau of Safety and Environmental Enforcement said energy firms have already shut in about 1.5 bcfd, or 55%, of offshore gas production in the Gulf of Mexico.
Refinitiv projected demand, including exports, would average 97.2 bcfd this week and next as an expected increase in heating demand offsets a decline in power generator usage.
The amount of gas flowing to LNG export plants averaged 7.4 bcfd so far in October. That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompt buyers to reverse cargo cancellations.—Reuters
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