U.S. natural gas futures fell about 4% to a new 10-week low on Friday on lower crude prices and forecasts that mild weather will remain through early October, keeping heating and cooling demand low and allowing utilities to pump plenty of gas into storage over the next few weeks.
Additionally, the U.S. National Hurricane Center (NHC) predicted that Tropical Depression 9 would strengthen into a hurricane as it moves from the Caribbean Sea to the Gulf of Mexico over the next few days before hitting the South Florida on Wednesday.
With much of the nation’s gas production located away from the Gulf of Mexico in shale basins like the Permian in West Texas and the Appalachians in Pennsylvania, analysts said tropical storms were further destroying demand as they knocked out power and could cause liquefied natural gas (LNG) export terminals to shut down.
Another factor weighing on gas prices was the expectation of a drop in demand in October when the Cove Point LNG plant in Maryland closes for a few weeks for maintenance. Cove Point consumes approximately 0.8 billion cubic feet per day (bcfd) of gas.
Gas consumption in the United States has already been curtailed for months by the ongoing outage at the Freeport LNG export plant in Texas, which has left more gas in the United States for utilities to inject. in stock for next winter.
Freeport, the second-largest LNG export plant in the United States, was consuming about 2 billion cubic feet per day of gas before it closed on June 8. Freeport LNG expects the facility to return to at least partial service in early to mid-November.
In Puerto Rico, meanwhile, about 927,000 homes and businesses remain without power following Hurricane Fiona on Sunday.
First-month gas futures NGc1 fell 26.1 cents, or 3.7%, to settle at $6.828 per million British thermal units (mmBtu), their lowest close since the July 14th.
Oil prices plunged about 5% to their lowest level in eight months as the US dollar hit its highest level in more than two decades and fears that rising interest rates could tip major economies in recession. WHERE
Lower gas prices kept gas futures in technically oversold territory with the relative strength index (RSI) below 30 for a second straight day.
For the week, the gas contract fell about 12%, its biggest weekly percentage decline since June. It was also the first time the first month had fallen for five consecutive weeks since January 2019.
Analysts at energy consultancy EBW Analytics said recent gas price declines have pushed gas prices below ethane prices, which should prompt energy companies to capture ethane instead. than rejecting it in the gas pipes. This should reduce the total amount of gas (plus ethane) available on the market.
Despite recent declines, gas futures are still up around 83% so far this year as higher prices in Europe and Asia keep demand for US LNG exports strong. Global gas prices have soared due to supply disruptions and sanctions related to Russia’s February 24 invasion of Ukraine.
Gas was trading around $51 per mmBtu in Europe TRNLTTFMc1 and $38 in Asia JKMc1.
Data provider Refinitiv said average gas production in the lower 48 U.S. states rose to 98.7 billion cubic feet per day in September from a record 98.0 billion cubic feet per day in August.
With cooler fall weather on the way, Refinitiv forecast average U.S. gas demand, including exports, to drop from 92.4 billion cubic feet per day this week to 91.4 billion cubic feet per day next week and 88.7 billion cubic feet per day in two weeks. The forecast for next week was higher than Refinitiv’s outlook on Thursday.
The average amount of gas delivered to LNG export plants in the United States rose to 11.3 billion cubic feet per day in September from 11.0 billion cubic feet per day in August. This compares to a monthly high of 12.9 bcfd in March. The seven major US export plants can transform about 13.8 billion cubic feet per day of gas into LNG.
Source: Reuters