NEW YORK: US natural gas futures held near a one-week low on Tuesday as lower output and higher demand forecasts offset expectations Hurricane Milton could cause millions of homes and businesses to lose power in Florida later this week.
Those power outages will reduce the amount of gas generators need to burn - possibly for days.
The US National Hurricane Center projected Milton will slam into the west coast of Florida as a major storm Wednesday night before sweeping across the central part of the state on Thursday.
Those likely Florida power outages will add to the roughly 200,000 homes and businesses still without electric service in the Carolinas and Georgia since Hurricane Helene moved inland after slamming into Florida on Sept. 26.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 0.9 cents, or 0.3%, to $2.737 per million British thermal units at 8:08 a.m. EDT (1208 GMT), putting the contract on track for its lowest close since Sept. 26 for a third day in a row.
One factor that supported prices in recent weeks - the front-month has gained about 41% over the past six weeks - was a drop in the amount of fuel utilities have injected into storage for the 2024-2025 winter heating season.
Storage builds in July, August and September were at record lows, according to federal energy data going back to 1997.
That is because many producers reduced their drilling activities so far this year after average spot monthly prices at the US Henry Hub benchmark in Louisiana fell to a 32-year low in March. Prices have remained relatively low since then.
Even though storage injections have been lower than usual in 20 of the past 21 weeks, the amount of gas in inventory was still about 5% above normal levels for this time of year due to low heating demand during the mild winter of 2023-2024.
Financial company LSEG said average gas output in the Lower 48 US states fell to 100.9 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September. That compares with a record 105.5 bcfd in December 2023.
On a daily basis, output was on track to fall about 1.5 bcfd over the past three days to a preliminary four-month low of 99.8 bcfd on Tuesday. Analysts, however, have noted that preliminary data is often revised later in the day.
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