U.S. natural gas futures steady as near-record output offsets high LNG exports

• Near-record gas output allows increased storage despite high summer demand
• LNG export feedgas on track for record in August
• March–April futures 'widow maker' spread hits record low amid stable supply

U.S. natural gas futures were little changed on Friday as near-record output and ample supplies in storage offset strong liquefied natural gas (LNG) exports and forecasts for the weather to remain hotter than normal through late August.

The heat means homes and businesses will likely keep their air conditioners cranked up until the end of the month, forcing power generators to burn more gas than usual for this time of year. More than 40% of the electricity produced in the U.S. comes from gas-fired power plants.

Front-month gas futures for September delivery on the New York Mercantile Exchange fell 1.3 cents, or 0.4%, to $3.054 per million British thermal units at 9:47 a.m. EDT (1347 GMT).

That put the contract on track to fall for a third week in a row, losing about 1% this week, 1% last week, and 13% three weeks ago.

In a sign that the market is not worried about having enough gas supplies this winter, the premium of futures for March over April 2026 was on track to fall to a record low on Friday.

The industry calls the March–April spread the "widow maker" because rapid price moves resulting from changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 B in 2006.

Traders use the March–April and October–November spreads to bet on winter weather forecasts and supply and demand. March is the last month of the winter heating season when utilities pull gas out of storage and October is the last month of the summer cooling season when utilities inject gas into storage.

Despite a hotter-than-usual summer, record output has allowed energy firms to inject more gas into storage than usual in recent months. Analysts said gas stockpiles were currently around 6% above normal for this time of year and would likely keep growing in coming weeks.

Supply and demand. Financial firm LSEG said average gas output in the Lower 48 states rose to 108.2 Bft³d so far in August. Output is on track for a new monthly record high, above July's record of 107.9 Bft³d.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 105.9 Bft³d this week to 109.0 Bft³d next week and 111.3 Bft³d in two weeks. The forecast for next week was lower than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.1 Bft³d so far in August, up from 15.5 Bft³d in July. That compares with a monthly record high of 16.0 Bft³d in April.

The U.S. became the world's biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.

Gas was trading around $11 per MMBtu at the Dutch Title Transfer Facility benchmark in Europe and $12 at the Japan Korea Marker benchmark in Asia.

(Reporting by Scott DiSavino in New York; Editing by Nia Williams)

Related News

Comments

{{ error }}

Add Comment

{{ comment.comment.Name }} Editor • {{ comment.timeAgo }}

{{ comment.comment.Text }}

Related News

• Most Read
• Most Commented