U.S. natural gas futures edged up about 1% to a nine-week high on Thursday on forecasts for more demand this week than previously expected.
That increase came ahead of a federal storage report expected to show a near-normal build last week and forecasts for milder weather and less demand next week than previously expected.
Analysts forecast U.S. utilities added 88 billion cubic feet (bcf) of gas into storage during the week ended Sept. 22. That compares with an increase of 103 bcf in the same week last year and a five-year (2018-2022) average increase of 84 bcf.
If correct, last week’s increase would boost stockpiles to 3.357 trillion cubic feet (tcf), or 5.9% above the five-year average of 3.170 tcf for the time of year.
On its first day as the front-month, gas futures for November delivery on the New York Mercantile Exchange rose 3.7 cents, or 1.3%, from where the November contract closed on Wednesday to $2.936 per million British thermal units at 8:54 a.m. EDT (1254 GMT).
That put the front-month up about 6% since the November contract was trading much higher than where the October contract closed when it was the front-month on Wednesday.
It also put the contract on track to rise for a fifth day in a row for the first time since early August 2023 and close over the 200-day moving average, a key level of technical resistance, for the first time since late November 2022.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states slid to 102.0 billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.
Meteorologists forecast the weather in the lower 48 states would remain warmer than normal through Oct. 6 before turning near-normal from Oct. 7-13.
Analysts noted that above-normal temperatures in early October were still relatively mild, with averages expected to be around 72 degrees Fahrenheit (22.2 Celsius) versus a normal of 69 F for that time of year.
With milder weather coming. LSEG forecast U.S. gas demand, including exports, would slide from 95.6 bcfd this week to 95.1 bcfd next week as power generators burn less gas to produce electricity for air conditioning.
The forecast for this week was higher than LSEG’s outlook on Wednesday, while its forecast for next week was lower.
Pipeline exports to Mexico rose to an average of 7.2 bcfd so far in September, up from a record 7.1 bcfd in August, according to LSEG data.
Gas flows to the seven big U.S. LNG export plants rose to an average of 12.6 bcfd so far in September, up from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
On a daily basis, however, feedgas was on track to hold around 12.1 bcfd for a second day in a row on Thursday after rising from a four-week low of 11.5 bcfd on Tuesday.
Tuesday’s low was due to ongoing maintenance at Berkshire Hathaway Energy’s 0.8-bcfd Cove Point in Maryland and reductions at other plants, including Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas.
Cove Point shut for about two weeks of maintenance on Sept. 20.
(Reporting by Scott DiSavino, Editing by Nick Zieminski)