U.S. natgas little changed as cooler forecasts erase early losses - Reuters

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Natural gas flares off at a production facility owned by Exxon near Carlsbad, New Mexico, U.S. February 11, 2019. Picture taken February 11, 2019. REUTERS/Nick Oxford

Oct 26 (Reuters) - U.S. natural gas futures were little changed on Tuesday after erasing earlier losses on midday forecasts calling for colder weather and higher heating demand over the next two weeks than previously expected.

Earlier in the session, prices had dropped about 5% due to an increase in output and forecasts for the weather to remain milder than normal through early November.

On its second-to-last-day as the front-month, gas futures for November delivery fell 1.6 cents, or 0.3%, to settle at $5.882 per million British thermal units (mmBtu). On Monday, the contract soared 11.7% to its highest close since Oct. 5, when it settled at its highest since December 2008.

Even though U.S. gas was trading near its highest in 12 years, U.S. prices have been held back from reaching the lofty levels seen in Europe and Asia.

Gas futures around the world were trading near record levels that were about six times higher in price than in the United States, as utilities in Europe and Asia compete for liquefied natural gas (LNG) cargoes to refill stockpiles ahead of the winter heating season and meet energy shortfalls that have caused power blackouts in China.

The United States, meanwhile, has more than enough gas in storage for the winter, ample production to meet domestic demand and U.S. LNG export plants were already operating near full capacity so no matter how high global prices rise, the United States could not produce much more LNG for export.

Analysts expect U.S. gas inventories will reach 3.6 trillion cubic feet (tcf) by the start of the winter heating season in November, which they said would be a comfortable level even though it falls short of the 3.7 tcf five-year average.

U.S. stockpiles were currently about 4% below the five-year (2016-2020) average for this time of year. In Europe, analysts say stockpiles were about 15% below normal.

One thing analysts said should calm European gas markets was an analysis from Germany's Economy Ministry that said allowing Russian gas giant Gazprom PAO's (GAZP.MM) Nord Stream 2 to pump Russian gas to Germany will not threaten supplies to the European Union. read more

Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 92.2 billion cubic feet per day (bcfd) so far in October, up from 91.1 bcfd in September. That compares with a monthly record of 95.4 bcfd in November 2019.

Refinitiv projected average U.S. gas demand, including exports, would rise from 89.2 bcfd this week to 92.4 bcfd next week as more homes and businesses turn on their heaters. The forecast for next week was higher than Refinitiv projected on Monday.

The amount of gas flowing to U.S. LNG export plants has averaged 10.4 bcfd so far in October, the same as in September, but was expected to rise in coming weeks as some liquefaction trains exit maintenance outages.

With gas prices near $30 per mmBtu in Europe and $34 in Asia , versus around $6 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States can produce.

But no matter how high global gas prices rise, the United States has the capacity to turn only about 10.5 bcfd of gas into LNG.

Global markets will have to wait until later this year to get more, when the sixth liquefaction train at Cheniere Energy Inc's (LNG.A) Sabine Pass and Venture Global LNG's Calcasieu Pass in Louisiana are expected to start producing LNG in test mode.

Reporting by Scott DiSavino; Editing by Shailesh Kuber, Jonathan Oatis and Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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October 27, 2021 at 02:27AM
https://www.reuters.com/business/energy/us-natgas-futures-ease-rising-output-mild-weather-forecasts-2021-10-26/

U.S. natgas little changed as cooler forecasts erase early losses - Reuters

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