US natgas edges up 1% to 5-week high on lower output, Freeport LNG return

By Scott DiSavino

U.S. natural gas futures edged up about 1% to a five-week high on Monday on recent output declines and increased flows to liquefied natural gas (LNG) export plants with the expected return to full service of Freeport LNG's plant in Texas.

Front-month gas futures for October delivery NG1! on the New York Mercantile Exchange rose 4.2 cents, or 1.4%, to settle at $3.09 per million British thermal units, their highest close since July 31.

The price increased, pushing the contract into technically overbought territory, despite forecasts for lower demand over the next two weeks than previously expected and ample supplies of gas in storage.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states has fallen to 107.7 billion cubic feet per day so far in September from a record monthly high of 108.3 bcfd in August.

Record output this year has allowed energy companies to inject more gas into storage than usual so far this summer. About 6% more gas was in storage than normal for this time of the year, and analysts said they expect that amount to grow in coming weeks.

Meteorologists forecast the weather will remain warmer than normal through September 23. That is expected to offset the usual rise in heating demand that starts around this time of year. Homes and businesses burn more gas for heating during the winter than energy firms burn in power plants to produce electricity for air conditioning.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.7 bcfd this week to 103.3 bcfd next week. Those forecasts were lower than LSEG's outlook on Friday.

The average amount of gas flowing to the eight big U.S. LNG export plants held around 15.8 bcfd so far in September, the same as in August. That compares with a monthly record high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to ease to a one-week low of 15.7 bcfd on Monday due to recent decreases at some plants, including Cheniere Energy's LNG 3.9-bcfd Corpus Christi facility in Texas, Venture Global LNG's VG 1.6-bcfd Calcasieu facility in Louisiana and Freeport LNG's 2.1-bcfd plant in Texas.

That compares with a daily LNG feedgas record of 17.3 bcfd on April 9.

The decline in daily LNG feedgas occurred even though flows to Venture Global LNG's VG.N 3.2-bcfd Plaquemines plant in Louisiana rose to a record 3.4 bcfd on Saturday. LNG plants can pull in more gas than they can convert into LNG since they use some of it for fuel liquefaction and other equipment.

In other LNG news, Berkshire Hathaway Energy's 0.8-bcfd Cove Point plant in Maryland is scheduled to shut around September 15 for about a month of planned annual autumn maintenance.