U.S. natural gas prices rise 1% on strong LNG export demand

U.S. natural gas futures edged up about 1% on Monday on near-record flows to liquefied natural gas (LNG) export plants, a small decline in output and forecasts for more demand this week than previously expected.

Front-month gas futures for November delivery on the New York Mercantile Exchange (NYMEX) rose 3.3 cents, or 1.0%, to settle at $3.357 per million British thermal units (mmBtu).

In the cash market, average prices at the Waha Hub in West Texas, which fell to a record low of minus $7.07 per mmBtu on Thursday, remained in negative territory for a ninth day in a row and an 18th time so far this year due to ongoing pipeline constraints from maintenance work.

In the tropics, the U.S. National Hurricane Center projected a broad area of low pressure in the central Atlantic Ocean had an 80% chance of strengthening into a tropical cyclone over the next week as it moves northwest toward the northern Caribbean Islands.

The NHC also projected a trough of low pressure in the Bay of Campeche in the Gulf of Mexico off central Mexico had a 10% chance of strengthening into a tropical cyclone over the next week.

Supply and demand. Financial firm LSEG said average gas output in the Lower 48 states fell to 106.5 billion cubic feet per day so far in October, down from 107.1 bcfd in September and a record monthly high of 108.0 bcfd in August.

Record output earlier this year allowed energy companies to inject more gas into storage than usual so far this summer. There was about 5% more gas in storage than normal for this time of year. 

Meteorologists forecast the weather will remain mostly warmer than normal through at least October 21.

That late-season warmth should reduce gas demand by cutting the amount of fuel used to heat homes and businesses by more than the amount of fuel power generators need to burn to keep air conditioners humming. About 40% of the power produced in the U.S. comes from burning gas.

LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 99.4 bcfd this week to 98.2 bcfd next week. The forecast for this week was higher than LSEG's outlook on Friday, while the forecast for next week was lower.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.2 bcfd so far in October, up from 15.7 bcfd in September and a monthly record high of 16.0 bcfd in April.

That LNG export feed gas increase came as flows to Venture Global LNG's 3.2-bcfd Plaquemines plant in Louisiana hit a record 3.6 bcfd on Sunday. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power operations.

The U.S. became the world's biggest LNG producer 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.

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