U.S. natural gas futures jumped over 10% on Sept. 23 from a seven-week low in the prior session as output continues to slide, demand edges up and LNG exports increase.
Front-month gas futures rose 18.6 cents, or 10.1%, to $2.020 per million British thermal units (mmBtu) at 8:59 a.m. EDT (12:59 GMT). On Sept. 22, the contract closed at its lowest since July 31 for a second day in a row.
Trade this week has already been volatile—prices fell over 10% on Sept. 21—as traders roll out of the front-month October contracts, which expire on Sept. 28, and into the much higher priced November. The premium of November over October reached a record high of 89 cents per mmBtu earlier this week.
Data provider Refinitiv said output in the Lower 48 U.S. states was on track to fall to 83.8 Bcf/d on Sept. 23, its lowest since August 2018 as low prices earlier this year prompted energy firms to cut back on drilling by so much that the amount of gas from new wells was no longer enough to cover declines at existing wells. The rig count fell to a record low in mid-August.
With low prices earlier in the week, Refinitiv projected demand, including exports, would rise from 82 Bcf/d this week to 84.4 Bcf/d next week as electric generators burn more gas instead of coal to produce power.
The amount of gas flowing to LNG export plants was on track to rise from a two-week low of 3.9 Bcf/d on Sept. 22 to 4 Bcf/d on Sept. 23 as some vessels docked in the Gulf of Mexico after Tropical Storm Beta dissipated.
U.S. pipeline exports to Mexico, meanwhile, were on track to average 6 Bcf/d in September, which would top August's record 5.9 Bcf/d.
U.S. Natgas Storage (Bcf)
Sept. 18 (Actual)
Sept. 11 (Actual)
average Sept. 18
U.S. Natural Gas Next-Day Prices ($ per mmBtu)
|Hub||Current Day||Prior Day|
|Transco Z6 New York||$1.17||$0.78|
Per-acre prices varied widely between $15 an acre and $11,353 an acre.
The Austin Chalk assessment, which includes the Tokio and Eutaw formations, is believed to also hold about 41.5 trillion cubic feet of natural gas, the report shows.
The wells were drilled by the Transocean Barents semisubmersible rig this summer in the Flemish Pass Basin.