US natural gas futures slipped on Tuesday on expectations of big storage injections to come, despite forecasts that heating demand and liquefied natural gas (LNG) exports will rise more than previously expected over the next two weeks.
"We are expecting another larger than normal injection that could place further pressures on the front of the curve in triggering a renewed influx of speculative capital into the short side," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 1.5 cents, or 0.7%, to settle at $2.288 per million British thermal units.
That decline carried over to longer-dated futures, with all contracts through 2022 down about 2 cents.
Refinitiv projected gas demand in the lower 48 US states would reach 82.5 billion cubic feet per day (bcfd) this week and 85.2 bcfd next week, up from its previous forecasts on Monday of 82.3 bcfd for this week and 84.5 bcfd for next week.
Most of that increase in demand is due to cooler forecasts that will boost heating demand faster than power generator cooling demand declines.
Gas flows to LNG export plants edged up to 6.1 bcfd on Monday from 6.0 bcfd on Sunday, according to Refinitiv data. That compares with an average of 6.1 bcfd last week and an all-time daily high of 6.8 bcfd on Aug. 25.
Refinitiv projected LNG exports could return to record highs next week after Dominion Energy Inc's Cove Point plant in Maryland returns to service.
Analysts said utilities likely added 88 billion cubic feet (bcf) of gas to storage during the week ended Oct. 4. Some analysts, like Ritterbusch, projected a bigger injection of around 100 bcf.
That compares with an injection of 91 bcf during the same week last year and a five-year (2014-18) average build of 89 bcf for the period.
If correct, that increase would boost stockpiles to 3.405 trillion cubic feet (tcf), 0.6% below the five-year average of 3.424 tcf for this time of year.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as much as 33% below that in March 2019. But with production close to a record high, analysts said stockpiles should reach a near-normal 3.7 tcf by the end of summer injection season on Oct. 31.
Gas production in the lower 48 states edged up to 92.9 bcfd on Monday from 92.5 bcfd on Sunday, according to Refinitiv data. That compares with an average of 93.1 bcfd last week and an all-time daily high of 93.8 bcfd on Sept. 29.