U.S. Natural Gas Futures Update
By Scott DiSavino
U.S. natural gas futures have increased approximately 1%, reaching a 15-week high. This rise is attributed to lower output early in the year, which has diminished the amount of gas stored for the winter heating season.
Storage Trends
Recent federal energy data indicates that storage injections during July, August, and early September were at record lows since 1997. A notable factor is that many producers have cut back on drilling after average spot monthly prices at the U.S. Henry Hub benchmark dropped to a 32-year low earlier this year.
Despite lower-than-normal storage injections in 19 of the past 20 weeks, gas in inventory remains 6% above the normal levels for this time of year, attributed to mild winter heating demands in 2023-2024.
Recent Trading Statistics
The front-month gas futures for November delivery on the New York Mercantile Exchange rose 2.1 cents, settling at $2.923 per million British thermal units (mmBtu). This is the highest close since June 13.
This increase has allowed the futures to remain in technically overbought territory for the second consecutive day, marking the first occurrence of this since May. Notably, this contract has risen roughly 37% in the month, the sharpest increase since July 2022.
Supply and Demand Dynamics
Gas output in the Lower 48 states averaged 102.1 bcfd in September, a decrease from 103.2 bcfd in August, contrasting with a record high of 105.5 bcfd in December 2023. A slight increase in output this weekend was noted as some production in the Gulf of Mexico resumed following Hurricane Helene.
Forecasts from LSEG indicate that average gas demand in the Lower 48 states, including exports, is expected to rise from 95.9 bcfd this week to 96.6 bcfd next week, albeit lower than earlier expectations.
Export Impacts
Flows to major U.S. liquefied natural gas (LNG) export plants currently average 12.7 bcfd, slightly down from 12.9 bcfd in August, compared with a record high of 14.7 bcfd in December 2023. The decline results primarily from the planned shutdown of the Cove Point LNG export plant in Maryland for maintenance.
Weekly Storage Data
| Week ended | Storage Change (bcf) | Total natgas in Storage (bcf) | Storage vs. 5-year average |
|---|---|---|---|
| Sep 27 | +60 | 3,552 | 5.8% |
| Sep 20 | +47 | 3,492 | 7.1% |
| Year ago | +87 | 3,420 | |
| Five-year average | +98 | 3,357 |
Global Gas Pricing
| Benchmark | Current Day | Prior Day | This Month | Prior Year | Five-Year Average |
|---|---|---|---|---|---|
| Henry Hub | 2.93 | 2.90 | 2.70 | 2.66 | 3.60 |
| Title Transfer Facility (TTF) | 12.68 | 12.47 | 11.44 | 13.04 | 14.39 |
| Japan Korea Marker (JKM) | 13.21 | 13.19 | 13.92 | 14.39 | 14.31 |
Power Generation Data
Week ended Oct 4
– Natural Gas: 44%
– Wind: 7%
– Solar: 4%
– Nuclear: 20%
– Coal: 18%
Conclusion
Despite a rise in natural gas futures, projected demand has softened due to power outages in various regions caused by Hurricane Helene, impacting overall market dynamics.
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