US NatGas Prices Drop as Hurricane Helene Causes Power Outages and Lowers Demand – Reuters

By Scott DiSavino

U.S. natural gas prices decreased by about 1% on Monday due to a slight uptick in output over the weekend and revised forecasts showing reduced demand for the next two weeks.

The modest output increase was attributed to some drillers resuming their production activities in the Gulf of Mexico following the passage of Hurricane Helene. Simultaneously, a decline in demand was noted, largely because more than two million homes and businesses in the U.S. Southeast and Midwest remained without power after the hurricane struck the region late last week.

As of 9:02 a.m. EDT, front-month gas futures for November delivery on the New York Mercantile Exchange were down 1.9 cents, or 0.7%, trading at $2.883 per million British thermal units. This follows a closing price on Friday that was the highest since June 18.

Despite this slight decline, the front-month futures remained in overbought territory for two consecutive days, something not seen since May. For the month, prices increased approximately 36%, marking the highest monthly gain since July 2022. In the quarterly view, the front-month futures have risen about 11% after a significant 48% jump in the previous quarter.

With gas futures having surged approximately 45% over the past five weeks, speculators have increased their net long positions in futures and options on the New York Mercantile and Intercontinental Exchanges for the fourth straight week, reaching the highest levels since early July, as reported by the U.S. Commodity Futures Trading Commission.

In Canada, next-day gas prices at the AECO hub in Alberta hit 4 cents per million British thermal units, representing the lowest price since August 2022’s record low of around 2 cents.

SUPPLY AND DEMAND

According to recent data, gas production in the lower 48 U.S. states averaged 102.1 billion cubic feet per day (bcfd) so far in September, down from 103.2 bcfd in August but higher than last week’s output as some Gulf of Mexico production restarted.

Forecasts for average gas demand in the lower 48 states, including exports, suggest an increase from 95.9 bcfd this week to 96.6 bcfd next week. However, these predictions are lower than earlier estimates made on Friday.

Gas flows to the seven major U.S. liquefied natural gas (LNG) export facilities averaged 12.7 bcfd in September, down from 12.9 bcfd in August and below December 2023’s record high of 14.7 bcfd. This decrease stemmed primarily from the planned shutdown of Berkshire Hathaway Energy’s Cove Point LNG export plant in Maryland for annual maintenance, expected to last around three weeks.

In 2023, the U.S. became the world’s leading LNG supplier, overtaking Australia and Qatar as global demand for exports increased due in part to supply disruptions and sanctions related to the conflict in Ukraine.

In Europe, natural gas prices were trading near a six-week high of $13 per million British thermal units at the Dutch Title Transfer Facility benchmark, while in Asia, the Japan Korea Marker benchmark saw prices at a one-week high of $13.

Key weekly statistics include:

• U.S. weekly natural gas storage change: +60 bcf
• Total natural gas in storage: 3,552 bcf

For the five-year average, total storage was 5.8% above the norm as of September 27.

Market Overview

Current market prices and averages for natural gas futures are as follows:

• Henry Hub: $2.93
• Title Transfer Facility (TTF): $12.68
• Japan Korea Marker (JKM): $13.21

Degree days forecast for the following two weeks indicates increased demand, with heating degree days slightly down and cooling degree days increased compared to previous years.

In reviewing power generation in the U.S. for select fuels:

• Natural Gas: 44%
• Coal: 18%
• Nuclear: 20%
• Wind: 7%
• Solar: 4%
• Hydro: 5%

Current natural gas prices in various hubs show significant variations, including:

• Henry Hub: $2.53
• Transco Z6 New York: $1.28
• PG&E Citygate: $3.05

Overall, the market remains dynamic with ongoing fluctuations influenced by weather patterns, production levels, and maintenance schedules impacting both supply and demand across the natural gas sector.