US natgas prices up 1% on record LNG exports, seasonally cooler weather

U.S. natural gas futures edged up about 1% on Friday with seasonally colder weather coming in mid-November and as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants rose to near-record highs.

Even though winter is coming,meteorologists projected temperatures would remain higher than normal through mid-November, limitingheating demand.

In addition, traders noted record output and ample amounts of gas in storage were capping price gains. There was currently about 6% more gas in storage than usual for this time of year.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange rose 4.3 cents, or 1.2%, to settle at $3.515 per million British thermal units (mmBtu).

That pushed the front-month back into technically overbought territory, with a relative strength index over 70, for the fourth time in five days.

For the week, the contract was up about 11% after gaining about 9% last week.

The premium of January futures over December NGZ23-F24 rose to a record high of 28 cents per mmBtu, which could encourage some speculators to leave gas in storage for longer in hopes of higher prices later in the winter. Utilities, however, will start to pull gas from storage in mid to late November as daily heating demand for the fuel starts to exceed production.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.6 billion cubic feet per day (bcfd) so far in November from a record 104.2 bcfd in October.

On a daily basis, output hit an all-time high of 107.6 bcfd on Thursday.

Meteorologists projected the weather would remain mostly warmer than normal through Nov. 18.

LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would drop from 109.9 bcfd this week to 101.3 bcfd next week as milder weather cuts heating demand before jumping to 108.9 bcfd as seasonally colder weather boosts heating use. The forecasts for this week and next were similar to LSEG’s outlook on Thursday.

Pipeline exports to Mexico slid to an average of 5.9 bcfd so far in November, down from 6.5 bcfd in October and a record 7.0 bcfd in August.

Analysts expect U.S. exports to Mexico to rise in coming months once U.S. energy company New Fortress Energy’s NFE.O plant in Altamira starts pulling in U.S. gas to turn into LNG for export in November.

Gas flows to the seven big U.S. LNG export plants rose to an average of 14.7 bcfd so far in November, up from 13.7 bcfd in October and a record 14.0 bcfd in April.
Source: Reuters (Reporting by Scott DiSavino; editing by David Evans and David Gregorio)