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U.S. natgas futures edge up as LNG exports rise, output slips

U.S. natural gas futures edged up almost 2% as flows to liquefied natural gas (LNG) export terminals increased at the same time output declined.

Traders noted prices rose even though demand for gas - other than for LNG export - was expected to decline over the next two weeks as the weather turns milder.

Front-month gas futures for April delivery on the New York Mercantile Exchange rose 2.7 cents, or 1.6%, to $1.680 per million British thermal units (mmBtu) at 8:24 a.m. EDT (1224 GMT). On Monday, the contract closed at its lowest since September 1995.

Even before the coronavirus started to cut global economic growth and demand for energy as it spread, gas prices were trading near their lowest in years as record production and months of mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely this winter.

With milder weather expected, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would slide from an average of 105.5 billion cubic feet per day (bcfd) this week to 100.3 bcfd next week. That is lower than Refinitiv's forecast on Tuesday of 105.6 bcfd this week and 101.1 bcfd next week.

The amount of gas flowing to U.S. LNG export plants, meanwhile, rose to 9.2 bcfd on Tuesday from 8.9 bcfd on Monday, according to Refinitiv. That compares with an average of 8.1 bcfd last week when fog delayed tanker traffic into Cheniere Energy Inc's Sabine Pass plant in Louisiana, and an all-time daily high of 9.5 bcfd on Jan. 31.

Gas production in the Lower 48 states slipped to 92.9 bcfd on Tuesday from 94.0 bcfd on Monday, according to Refinitiv. That compares with an average of 94.1 bcfd last week and an all-time daily high of 96.6 bcfd on Nov. 30. Traders noted most of the decline was in Pennsylvania were flows on Enbridge Inc's Texas Eastern system were reduced in some areas. Officials at Enbridge were not immediately available for comment.

In the spot market, next-day power prices at the ERCOT North Hub  in Texas for Wednesday more than doubled to over $60 per megawatt hour, their highest since October, while gas prices at the Waha hub dropped to just five cents per mmBtu, their lowest since turning negative in early March.

(Reporting by Scott DiSavino; Editing by Bernadette Baum)"

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

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