NEW YORK: US natural gas futures fell about 3% on Thursday ahead of a federal report expected to show utilities injected more gas into storage last week than usual and forecasts for lower demand over the next two weeks than previously expected.
Those lower demand forecasts should allow utilities to keep adding gas into storage for a few weeks beyond the usual Oct. 31 end of the injection season.
Analysts estimated US utilities added 97 billion cubic feet (bcf) of gas to storage during the week ended Oct. 28. That compares with an increase of 66 bcf in the same week last year and a five-year (2017-2021) average increase of 45 bcf.
If correct, last week’s increase would push stockpiles to 3.491 trillion cubic feet (tcf), or 4.0% below the five-year average of 3.636 tcf for this time of the year.
Futures prices declined despite forecasts for colder weather that should boost heating demand in mid- to late November, a drop in output so far this month and expectations gas demand will rise once the Freeport liquefied natural gas (LNG) export plant in Texas exits an outage.
Freeport LNG expects its 2.1-billion-cubic-feet-per-day (bcfd) export plant to return to at least partial service in early to mid-November following an unexpected shutdown on June 8 caused by a pipeline explosion.
At least three vessels were lined up to pick up LNG at Freeport, according to Refinitiv data. Prism Brilliance and Prism Diversity were waiting off the coast from the plant, and Prism Courage was expected to arrive on Friday.
In what has already been an extremely volatile week, front-month gas futures were down 15.7 cents, or 2.5%, to $6.111 per million British thermal units (mmBtu) at 9:48 a.m. EDT (1348 GMT). That follows a rise of 12% on Monday, a drop of 10% on Tuesday and a rise of 10% on Wednesday.
Overall, US gas futures were still up about 64% so far this year as much higher global gas prices feed demand for US exports due to supply disruptions and sanctions linked to Russia’s Feb. 24 invasion of Ukraine.
Gas was trading at $37 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $29 at the Japan Korea Marker (JKM) in Asia.
US gas futures lag far behind global prices because the United States is the world’s top producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from exporting more LNG.
Data provider Refinitiv said that average gas output in the US Lower 48 states fell to 97.8 bcfd so far in November, down from a record 99.4 bcfd in October. Traders, however, noted that early-month output figures were usually revised higher later in the month.