U.S. Natural Gas Jumps 5% on Bargain Buying, Strong LNG Flows
U.S. natural gas futures rose more than 5% on Aug. 27 after touching a 10-month low earlier this week, driven by bargain buying and strong LNG export demand.
(Reuters) — U.S. natural gas futures rose over 5% on Aug. 27 after a sharp decline earlier this week, buoyed by bargain buying and strong LNG export flows.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 15 cents, or 5.5%, to settle at $2.867 per million British thermal. The contract, which expires today, had touched a 10-month low on Aug. 25, its weakest since November 4, 2024.
"I think the market has sold off a lot. The bearishness is already pretty well factored in," said Kyle Cooper, energy market analyst at IAF Advisors.
"Never say never with natural gas, but the most likely scenario is to chop or trend lower over the next few weeks until demand materializes in late October or November. There's little impetus for an increase as demand fades into the shoulder season, with national demand set to plummet and hurricane risks remaining largely bearish," Cooper said.
The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 15.9 Bcf/d so far in August, up from 15.6 Bcf/d in July. That compares with a record monthly high of 16.0 Bcf/d in April.
Financial firm LSEG estimated 155 cooling degree days over the next two weeks, higher than the 131 CDDs estimated on Aug. 26. The norm for this time of year is 135 CDDs. CDDs, which are used to estimate demand to cool homes and businesses, measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius).
LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 111.1 Bcf/d this week to 107.1 Bcf/d next week and 104.3 Bcf/d in two weeks. The forecasts for this week and next were similar to LSEG's outlook on Aug. 26.
LSEG said average gas output in the Lower 48 states had risen to 108.5 billion cubic feet per day so far in August, up from a record monthly high of 107.8 Bcf/d in July.
In the tropics, the U.S. National Hurricane Center said no disturbances were expected in the Atlantic. Tropical Storm Fernand, which formed south-southeast of Bermuda on Saturday, is forecast to become post-tropical within a day.
The U.S. Energy Information Administration is scheduled to release its weekly storage report at 10:30 a.m. EDT (1430 GMT) on Aug. 27.
Last week, the U.S. Energy Information Administration said energy firms added 13 billion cubic feet of gas to storage during the week ended Aug. 15. That was smaller than the 22-Bcf build analysts had forecast in a Reuters poll, and compares with an increase of 29 Bcf during the same week last year and an average build of 35 Bcf over the 2020 to 2024 period.
Meanwhile, Sempra will supply 2 million tonnes per annum of liquefied natural gas from the Port Arthur LNG Phase 2 development project to EQT Corp., the companies said.