U.S. Natural Gas Prices Climb 3% on Small Storage Build, Higher LNG Flows
U.S. natural gas prices rose 3% after a smaller-than-expected storage build and higher LNG export flows. The EIA reported a 13 Bcf injection, well below forecasts, while LNG feedgas deliveries climbed to 15.8 Bcf/d in August.
(Reuters) — U.S. natural gas futures climbed about 3% on Aug. 21 on a smaller-than-expected storage build, recent declines in daily output and an increase in gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 7.4 cents, or 2.7%, to settle at $2.826 per million British thermal units (MMBtu). On Aug. 20, the contract closed at its lowest since November 8 for a second day in a row.
Thursday's price increase pushed the contract out of technically oversold territory.
The U.S. Energy Information Administration (EIA) said energy firms added 13 billion cubic feet (Bcf) of gas into storage during the week ended August 15.
That was smaller than the 22-Bcf build analysts 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.
Analysts said the build was smaller-than-usual due to increased cooling demand during hot weather last week.
Supply and Demand
Financial firm LSEG said average gas output in the Lower 48 states rose to 108.4 billion cubic feet per day so far in August, up from a record monthly high of 107.8 Bcf/d in July.
On a daily basis, however, output was on track to drop by about 3.6 Bcf/d to a preliminary six-week low of 106.4 Bcf/d on Thursday since hitting a daily record high of 109.8 Bcf/d on July 28.
Meteorologists forecast the weather will remain mostly near normal through September 5, which is about the same as previously expected.
LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 110.8 Bcf/d this week to 106.8 Bcf/d next week. Those forecasts were similar to LSEG's outlook on Wednesday.
The average amount of gas flowing to the eight big U.S. LNG export plants rose to 15.8 Bcf/d so far in August, up from 15.5 Bcf/d in July. That compares with a record monthly high of 16.0 Bcf/d in April.
On a daily basis, LNG export feedgas was on track to rise to 15.5 Bcf/d on Thursday, up from an average of 14.2 Bcf/d over the prior three days due to reductions at several plants, including Venture Global LNG's 1.6-Bcf/d Calcasieu in Louisiana, Cameron LNG's 2.0-Bcf/d plant in Louisiana, and Freeport LNG's 2.1-Bcf/d plant in Texas.
In the Atlantic basin, meanwhile, the U.S. National Hurricane Center forecast Hurricane Erin, currently located in the ocean between North Carolina and Bermuda, would move northeast off the east coasts of the U.S. and Canada for the next several days.
Erin was expected to cause some tropical storm force winds and rough seas off eastern North Carolina and Virginia over the next 24 hours.