US natgas prices rise 2% before contract expiry as LNG flows increase

By Scott DiSavino

NEW YORK, Oct 27 (Reuters) - US natural gas futures climbed about 2% on Tuesday in volatile technical trade ahead of contract expiration and on increasing amounts of gas flowing to liquefied natural gas export plants in recent days.

On its second-to-last day as the front-month, gas futures for November delivery on the New York Mercantile Exchange rose 6 cents, or 2%, to $2.662 per million British thermal units (mmBtu).

Despite the price increase, the front-month remained in technically oversold territory for a fifth day in a row, the longest such stretch since April, after closing at its lowest level since April 28 on Monday. Analysts said that low close and the coming expiration of the November contract prompted some short sellers to take profits.

Futures for December , which will soon be the front-month, held near $3.02 per mmBtu.

In the spot market, next-day gas at the US Henry Hub benchmark in Louisiana fell to $2.52 per mmBtu, its lowest level since November 2024.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the US Lower 48 states has slid to 112.0 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 bcfd in both August and September.

On a daily basis, however, output has recovered to an average of around 113.5 bcfd over the past week.

Looking ahead, meteorologists predicted weather across the country would remain mostly milder than normal through November 11, which should keep heating demand lower than usual in coming weeks.

Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 105.7 bcfd this week to 110.7 bcfd next week. The forecast for this week was lower than LSEG's outlook on Monday.

LNG EXPORTS

Average gas flows to the nine major US LNG export plants have risen to 18.3 bcfd so far in October, up from 17.9 bcfd in September. That figure is still below the monthly record high of 18.8 bcfd in April.

On a daily basis, meanwhile, LNG feedgas has increased to an average of around 19.2 bcfd over the past two weeks.

The third-largest US LNG exporter, Freeport LNG, returned to full production on Tuesday after the plant went down on Monday, according to LSEG data.

It was not immediately known why the plant shut on Monday. Freeport declined to comment.

Demand for US gas is high around the world due to supply disruptions linked to Russia's invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.

Gas was trading near 46-month highs of around $31 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and $32 at the Japan-Korea Marker benchmark in Asia. NG/EU

US gas prices, however, have not reacted much to the conflicts in Ukraine and Iran because the US produces all the gas it consumes and US LNG companies are already liquefying as much fuel as they can.

As a result, no matter how high global gas prices go, the US cannot send more LNG to the rest of the world until new liquefaction units under construction enter service in coming months and years.