U.S. natural gas futures fell to a two-week low on Tuesday on forecasts for milder weather over the next week that will reduce air conditioning demand. Traders noted U.S. prices fell even though gas in Europe and Asia hit record highs over $25 per million British thermal units (mmBtu) versus just about $5 for the U.S. fuel. Buyers around the world kept on purchasing all the liquefied natural gas (LNG) the United States can produce.
Global prices are high due to Asia's insatiable demand for gas and Europe's scramble to refill stockpiles ahead of winter heating season. The United States is already producing as much LNG as it can, and the amount of gas flowing to U.S. LNG export plants slipped to an average of 10.4 billion cubic feet per day (bcfd) so far in September from 10.5 bcfd in August, according to data provider Refinitiv. That compares with a monthly record of 11.5 bcfd in April.
Traders said U.S. LNG exports were reduced this month by a brief shutdown at Freeport LNG's plant in Texas during Tropical Storm Nicholas and start of maintenance at Berkshire Hathaway Energy's Cove Point in Maryland on Monday.
Front-month gas futures fell 18.0 cents, or 3.6%, to settle at $4.805 per mmBtu, their lowest close since Sept. 7. Since hitting a seven-year high last week, the front-month has dropped about 12% over the past four days on growing expectations the United States will have enough gas in storage for its winter heating season. That is the longest losing streak for the front-month since May. U.S. gas stockpiles were about 7.1% below their five-year normal for this time of year.
Refinitiv said gas output in the U.S. Lower 48 states fell to an average of 90.6 bcfd so far in September from 92.0 bcfd in August, due mostly to Ida-related losses along the Gulf Coast. That compares with a monthly record high of 95.4 bcfd in November 2019. About 0.6 bcfd, or 27%, of gas production in the U.S. Gulf of Mexico remained shut-in since Ida hit Louisiana on Aug. 29, government data showed on Friday.
With milder weather due, Refinitiv projected average U.S. gas demand, including exports, would fall from 86.3 bcfd this week to 83.5 bcfd next week as air conditioning use declines.
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