NEW YORK: US natural gas futures fell about 6% to a one-week low on Tuesday on forecasts after the long US Labour Day holiday weekend for cooler weather and lower gas demand over the next two weeks than previously expected.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 17.3 cents, or 6.3%, to $2.592 per million British thermal units (mmBtu) at 10:43 a.m. EDT (1443 GMT), putting the contract on track for its lowest close since Aug. 29.
Even though gas prices gained 9% last week, speculators added so many shorts that they switched their net long futures and options position into a net short position on the New York Mercantile and Intercontinental Exchanges for the first time since early June, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.
Financial firm LSEG said average gas output in the lower 48 US states slid to 101.7 billion cubic feet per day (bcfd) so far in September from 102.2 bcfd in August and a record 102.3 bcfd in May.
Even though the weather in the lower 48 US states will be less hot than previously expected over the next two weeks, meteorologists still forecast it will remain mostly hotter than normal through at least Sept. 20.
LSEG forecast US gas demand, including exports, will ease from 100.9 bcfd this week to 100.6 bcfd next week with a seasonal cooling of the weather. Those forecasts were lower than LSEG’s outlook on Friday before the long Labor Day weekend.
Gas flows to the seven big US LNG export plants fell from an average of 12.3 bcfd in August to 11.7 bcfd so far in September due mostly to reductions at Cheniere Energy’s Sabine Pass in Louisiana. That compares with a monthly record of 14.0 bcfd in April.
The US is on track to become the world’s biggest LNG supplier in 2023 - ahead of recent leaders Australia and Qatar - as much higher global prices continue to feed demand for US exports due to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $13 at the Japan Korea Marker (JKM) in Asia.
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