NEW YORK: US natural gas futures extended their decline on Thursday on lower cooling demand due to forecasts for less warmer-than-normal weather than previously expected.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 3.30 cents or 1.4% to $2.25 per million British thermal units (mmBtu) by 10:03 a.m. EDT (1403 GMT).
The market is on the low side right now as typically there is less demand for gas in the shoulder season. In the summer time natural gas goes higher because of air conditioning requirements and then in the winter time heating demand goes up, but in September and October the weather is in between, said Thomas Saal, senior vice president for energy at StoneX Financial.
Financial firm LSEG estimated 124 cooling degree days (CDDs) over the next two weeks, lower than Wednesday’s 134 CDDs. The normal for this time of year is 89 CDDs. Cooling degree days, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius).
LSEG forecast average gas demand in the Lower 48, including exports, at 99.8 billion cubic feet (bcfd) per day this week to 100.1 bcfd next week which is lower than the demand forecast at 100.5 bcfd on Wednesday.
LSEG forecast average gas supply in the Lower 48, including exports, at 101.7 bcfd this week to go up to 102.0 bcfd next week.
LSEG said gas output in the Lower 48 US states slid to an average of 102.1 bcfd so far in September, down from 103.2 bcfd in August.
“But what happens now with the October contract is that without any big weather events like a hurricane or an early cold spell the market’s just going to tread water. It’ll stay in this range,” Saal said.
US utilities likely added a smaller-than-usual 56 billion cubic feet (bcf) of natural gas into storage last week, according to the average estimate in a Reuters poll on Wednesday. If correct, the forecast for the week ended Sept. 13 would increase stockpiles to 3.443 trillion cubic feet.
In the prior week ended Sept. 6, utilities added 40 bcf of gas into storage compared with an increase of 33 bcf in the same week last year and a five-year (2019-2023) average rise of 51 bcf for this time of year.
The US Energy Information Administration will release its weekly storage report at 10:30 a.m. EDT (1430 GMT) on Thursday.
“The EIA data is another factor that’s been interesting as the injections have been a little on the low side which would be marginally bullish but we’ll see what happens when the number comes out today,” Saal added.
Meanwhile, the CEO of US natural gas producer EQT Corp on Wednesday said US prices for the fuel will remain below $3 per million British thermal units in the short term.
Dutch and British wholesale gas prices edged higher on Thursday morning as a ramp-up in Norwegian maintenance curbed supply.
Meanwhile, Chesapeake Energy’s $7 billion acquisition of rival natural gas producer Southwestern Energy is expected to close early in the fourth quarter.
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