By Scott DiSavino
NEW YORK, Nov 15 – U.S. natural gas futures gained about 2% on Wednesday on forecasts for colder weather and more heating demand through the end of November than previously expected and as record amounts of gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for December delivery on the New York Mercantile Exchange rose 7.5 cents, or 2.4%, to $3.181 per million British thermal units at 9:12 a.m. EST (1412 GMT).
That price increase came despite record output that should allow utilities to keep injecting gas into storage through at least late November.
Utilities usually start pulling gas out of storage to meet heating demand in mid November.
Analysts forecast utilities pulled about 7 billion cubic feet (bcf) of gas out of storage during the week ended Nov. 3, which was colder than normal. If correct, that would be the first withdrawal of the 2023-2024 winter season.
But with the return of milder weather during the week ended Nov. 10, analysts forecast utilities injected about 45 bcf of gas back into storage and could keep injecting gas into storage during the weeks ended Nov. 17 and 24 if output remains at record highs.
The U.S. Energy Information Administration (EIA) did not release its weekly gas storage report last week due to a planned systems upgrade. EIA said it will resume its regular schedule this week.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 107.3 billion cubic feet per day (bcfd) so far in November, up from a record 104.2 bcfd in October.
Over the past three days, however, output was on track to drop by about 2.6 bcfd to a preliminary one-week low of 105.9 bcfd on Wednesday.
Meteorologists projected the weather would remain warmer than normal through Nov. 21 before turning near to colder than normal from Nov. 22-30.
With colder weather coming, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would rise from 111.3 bcfd this week to 113.9 bcfd next week. The forecast for next week was lower than Refinitiv’s outlook on Tuesday.
Pipeline exports to Mexico fell to an average of 5.8 bcfd so far in November, down from 6.5 bcfd in October and a record 7.0 bcfd in August. On a daily basis, exports to Mexico were on track to drop to an eight-month low of 4.1 bcfd on Wednesday.
Analysts expect U.S. exports to Mexico will rise once the first 0.18-bcfd liquefaction train at U.S.-based New Fortress Energy’s plant in Altamira in Mexico starts pulling in U.S. gas in December to turn into LNG for export.
Gas flows to the seven big U.S. LNG export plants rose to an average of 14.1 bcfd so far in November, up from 13.7 bcfd in October and a monthly record of 14.0 bcfd in April.
The U.S. is on track to become the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due in part to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $17 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Sharon Singleton)