U.S. natgas prices slide 3% on rising output, less cold forecast for late November
- S. gas prices on track to rise for fourth week in a row
- S. LNG feedgas on track to hit 10-month high
- Gas prices in Europe hold near 11-month high
U.S. natural gas futures slid about 3% to a one-week low on Friday on an increase in daily output and forecasts for less cold weather in late November than previously expected.
That mild late-November weather should reduce heating demand and allow utilities to continue injecting more gas into storage for another week.
Capping price losses was a recent increase in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants to a 10-month high and an increase in gas prices in Europe to an 11-month high.
Front-month gas futures for December delivery on the New York Mercantile Exchange fell 7.4 cents, or 2.7%, to $2.711 per million British thermal units (MMBtu), putting the contract on track for its lowest close since Nov. 8.
For the week, the front-month was up about 1%, putting it on track to rise for a fourth week in a row for the first time since September. During those four weeks, the contract has gained about 20%.
Analysts said utilities likely added more gas to storage than usual during the mild week ended Nov. 15. If correct, that would be the first time inventories rose by more than usual for five weeks in a row since October 2022.
There was currently about 7% more gas is in storage than normal for this time of year.
Prior to the last month or so, however, injections had been smaller than usual for 14 straight weeks because many producers reduced drilling activities this year after average spot monthly prices at the U.S. Henry Hub benchmark in Louisiana fell to a 32-year low for the month of March, and have remained relatively soft since then.
Supply and demand. Financial firm LSEG said average gas output in the Lower 48 U.S. states eased to 100.3 Bft3d so far in November, down from 101.3 Bft3d in October. That compares with a record 105.3 Bft3d in December 2023.
On a daily basis, output rose by about 2.7 Bft3d over the prior four days to 101.2 Bft3d on Thursday, up from a nine-month low of 98.4 Bft3d on Nov. 10.
Meteorologists projected weather in the Lower 48 states will remain mostly warmer than normal through Nov. 30 except for some near normal days from Nov. 21–24.
But with seasonally colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 108.1 Bft3d this week to 109.1 Bft3d next week and 117.7 Bft3d in two weeks. The forecasts for this week and next were lower than LSEG's outlook on Thursday.
The amount of gas flowing to the seven big operating U.S. LNG export plants edged up to an average of 13.3 Bft3d so far in November, up from 13.1 Bft3d in October. That compares with a monthly record high of 14.7 Bft3d in December 2023.
On a daily basis, LNG feedgas was on track to rise to a 10-month high of 14.4 Bft3d on Friday with flows to a few plants hitting multi-week highs in recent days.
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine in February 2022.
Gas prices traded near an 11-month high of around $14 per MMBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe on concerns over supplies and storage draws.
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