U.S. natural gas futures climbed about 3% to a one-month high on Wednesday on a recent drop in daily output.

That price increase came despite ample supplies of gas in storage, a small decline in flows to liquefied natural gas (LNG) export plants, mild weather and forecasts for lower demand next week than previously expected.

Front-month gas futures for October delivery on the New York Mercantile Exchange rose 8.0 cents, or 2.7%, to $3.089 per million British thermal units at 8:44 a.m. EDT (1244 GMT), putting the contract on track for its highest close since July 30.

That price increase put the front-month up for a sixth day in a row for the first time since February and pushed it into technically overbought territory for the first time since mid-June. The contract has climbed about 15% during those six days.

In the tropics, the U.S. National Hurricane Center projected a disturbance in the Atlantic Ocean near the Cape Verde Islands had a 70% chance of strengthening into a tropical cyclone over the next week as it heads west toward the Caribbean Islands.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.4 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.

On a daily basis, output was on track to drop to a preliminary seven-week low of 106.1 bcfd on Wednesday, down from a one-week high of 108.5 bcfd on Tuesday. That compares with a daily record high of 109.6 bcfd on July 28. Preliminary data is often revised later in the day.

Record output so far this year has allowed energy companies to inject more gas into storage than usual so far this summer. There was about 5% more gas in storage than normal for this time of year, and analysts said they expect that amount to grow in coming weeks.

Meteorologists forecast the weather will remain mostly near normal through September 18, which is about the same as previously expected.

LSEG projected average gas demand in the Lower 48 states, including exports, would decline from 104.4 bcfd this week to 102.7 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Tuesday.

The average amount of gas flowing to the eight big U.S. LNG export plants slid to 15.6 bcfd so far in September, down from 15.8 bcfd 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 15.5 bcfd on Wednesday, down from an average of 15.8 bcfd last week due to decreases at some plants, including Cheniere Energy’s 3.9-bcfd Corpus Christi in Texas and Venture Global LNG’s 1.6-bcfd Calcasieu in Louisiana. That compares with a daily LNG feedgas record of 17.3 bcfd on April 9.

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.
Source: Reuters