U.S. natural gas futures slid about 2% on Nov. 7 on forecasts for the weather to remain mild through late November, which should keep heating demand low and allow utilities to inject more gas into storage than usual for a couple more weeks.

The said utilities added 69 Bcf of gas into storage during the week ended Nov. 1.

That was slightly higher than the 65-Bcf build analysts forecast in a Reuters poll and compares with an increase of 19 Bcf in the same week last year and a five-year (2019-2023) average rise of 32 Bcf for this time of year. 

Analysts noted last week's injection was the first time utilities added more gas into storage than usual for three weeks in a row since October 2023. They projected this week's injection would be the first time storage additions were bigger than the five-year average for a fourth week in a row since October 2022.

Prior to the last few weeks, storage injections had been smaller than usual for 14 weeks in a row because many producers reduced drilling activities so far this year after average spot monthly prices at the U.S. Henry Hub benchmark in Louisiana fell to a 32-year low in March. Prices have remained relatively low since then, dropping to a 23-year low in October.

Front-month gas futures for December delivery on the New York Mercantile Exchange fell 5.4 cents, or 2.0%, to settle at $2.69 per million British thermal units.

Prices declined despite forecasts for slightly cooler, but still milder-than-normal, weather and higher heating demand than previously expected, and lower output due mostly to pipeline issues and curtailments in the Gulf of Mexico ahead of Hurricane Rafael.

The U.S. National Hurricane Center, however, projected Rafael would move west across the Gulf of Mexico through the weekend when it will weaken into a tropical storm and turn southwest toward Mexico early next week.

Earlier this week, the NHC forecast Rafael could hit the U.S. Gulf Coast around Louisiana or Texas, causing some U.S. energy firms to curtail oil and gas output from their offshore Gulf of Mexico platforms.

The U.S. Bureau of Safety and Environmental Enforcement said energy firms cut Gulf of Mexico gas production by about 10%. But unlike 20 years ago, when 20% of U.S. gas production came from the federal offshore Gulf of Mexico, that offshore region only produces about 2% of the country's gas.

Supply and demand

Financial firm LSEG said average gas output in the Lower 48 U.S. states slid to 100.8 Bcf/d so far in November from 101.3 Bcf/d in October. That compared with a record 105.3 Bcf/d in December 2023.

Meteorologists projected the weather in the Lower 48 states would remain warmer than normal through at least Nov. 22.

LSEG forecast average gas demand in the Lower 48, including exports, would rise from 101.8 Bcf/d this week to 104.3 Bcf/d next week.

The amount of gas flowing to the seven big U.S. LNG export plants slid to an average of 12.6 Bcf/d so far in November, down from 13.1 Bcf/d in October. That compares with a monthly record high of 14.7 Bcf/d in December 2023.

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