US natgas futures ease on milder weather, lower demand outlook

By Scott DiSavino

NEW YORK, Sept 24 (Reuters) - US natural gas futures eased on Thursday on forecasts for milder weather and less demand next week than previously expected.

Front-month gas futures for October delivery on the New York Mercantile Exchange fell 1.6 cents, or 0.5%, to $3.007 per million British thermal units. On Wednesday, the contract closed at its highest since July 8.

Prices declined despite a bullish drop in daily output and a federal report showing that hot weather and high air conditioning demand last week helped cause energy firms to add less gas to storage than usual for this time of year.

The US Energy Information Administration said energy firms added 53 billion cubic feet of gas to storage during the week ended September 18.

That was in line with the 53-bcf build analysts forecast in a Reuters poll and compares with an increase of 77 bcf during the same week last year and a five-year (2021-2025) average increase of 76 bcf for the period. EIA/GAS NGAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the US Lower 48 states has risen to 112.8 billion cubic feet per day so far in September, up from a monthly record high of 112.2 bcfd in August.

On a daily basis, however, output was on track to drop to an 11-week low of 108.4 bcfd on Thursday, due mostly to declines in Louisiana and West Virginia.

Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7% above normal in April.

But hotter-than-normal weather over the summer forced energy firms to pull lots of fuel from storage to produce the power needed to keep air conditioners humming, cutting the inventory surplus. About 40% of US power generation comes from gas-fired plants.

With the weather remaining hot last week, the amount of gas in storage slid to 2.9% above normal during the week ended September 18, down from 3.7% above normal in the previous week. EIA/GAS NGAS/POLL

Looking forward, however, meteorologists forecast the weather would remain mostly near normal through October 9.

LSEG said average gas demand in the Lower 48 states, including exports, would slide from 108.0 bcfd this week to 103.3 bcfd next week. The forecast for next week was lower than LSEG's outlook on Wednesday.

LNG EXPORTS

Average gas flows to the nine big US LNG export plants have risen to 17.8 bcfd so far in September, up from 17.2 bcfd in August, but have remained short of the monthly record high of 18.8 bcfd in April.

The increase in average LNG feedgas so far in September occurred despite the shutdown of US energy firm Berkshire Hathaway Energy's 0.8-bcfd Cove Point LNG export plant in Maryland around September 19 for a few weeks of planned annual maintenance.

Around the world, gas traded near $25 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and $26 at the Japan-Korea Marker benchmark in Asia. NG/EU