NEW YORK: US natural gas futures edged up about 1% on Thursday on forecasts for higher demand next week than previously expected.
The small price move came ahead of a federal report expected to show that utilities last week added less gas to storage than usual for a 13th week in a row.
That’s because many producers reduced drilling activities earlier 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.
Analysts forecast US utilities added 77 billion cubic feet (bcf) of gas into storage during the week ended Oct. 11. That compares with an increase of 93 bcf in the same week last year and a five-year (2019-2023) average rise of 89 bcf for this time of year.
If correct, that will leave gas stocks about 5% above normal for this time of year.
Front-month gas futures for November delivery on the New York Mercantile Exchange rose 2.1 cents, or 0.9%, to $2.388 per million British thermal units (mmBtu) at 8:30 a.m. EDT (1230 GMT). On Wednesday, the contract closed at its lowest since Sept. 19. Despite the small gain the front-month was on track to remain in technically oversold territory for a second day in a row for the first time since July.
In the spot market, pipeline constraints caused next-day gas prices at the Waha hub in the Permian Shale in West Texas to remain in negative territory for a second day in a row for Thursday and a record 38th time this year.
Until this week, Waha prices had remained in positive territory since mid September - just after the Matterhorn pipeline from the Permian to the Houston area started receiving gas.
Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six times in 2020 and once in 2023.
Financial group LSEG said average gas output in the Lower 48 US states slipped to 101.3 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.
Meteorologists projected the weather in the Lower 48 states will remain mostly warmer than normal through Nov. 1.
LSEG forecast that unseasonably warm weather would cause average gas demand in the Lower 48, including exports, to slide from 98.1 bcfd this week to 96.4 bcfd next week. The forecast for next week was higher than LSEG’s outlook on Wednesday.
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