U.S. natural gas futures slipped on Sept. 16, pressured by a larger-than-expected storage build last week and forecasts for slightly lower demand through next week.
Front-month gas futures fell 12.5 cents, or 2.3%, to settle at $5.335 per million British thermal units (mmBtu), posting their biggest single-day decline in over a week.
Prices pulled back after marking their highest close since February 2014 in the previous session.
Refinitiv analyst John Abeln said the injection being larger than most estimates is a bearish signal for the market, but not enough to put a ceiling on the recent rise in prices, which will go higher as global rates keep going up.
The U.S. Energy Information Administration (EIA) said utilities added 83 billion cubic feet (Bcf) of gas into storage during the week ended Sept. 10. That was higher than the 76-Bcf build analysts forecast in a Reuters poll, lower than the increase of 86 Bcf in the same week last year and above a five-year (2016-2020) average increase of 79 Bcf.
Last week's injection boosted stockpiles to 3.006 trillion cubic feet (Tcf), or 7.1% below the five-year average of 3.237 Tcf for this time of year. That means U.S. utilities have stored less gas than normal for the winter heating season when demand for the fuel peaks.
Robert DiDona of Energy Ventures Analysis said that while recent storms had caused a slight demand loss, to go along with seasonal hits to consumption, there is unlikely to be a significant paradigm shift in the recent upward trend of prices with global rates as elevated as they are.
Much of that expected demand decline came from the shutdown of the Freeport LNG export plant in Texas during Tropical Storm Nicholas on Sept. 14 and upcoming planned maintenance at Berkshire Hathaway Energy's Cove
Point LNG export plant in Maryland that should start early next week.
Refinitiv said Freeport was still scheduled to take in about 0.2 billion cubic feet per day (Bcf/d) on Sept. 16, up from 0.05 Bcf/d on Sept. 15. That, is down from an average of 1.8 Bcf/d pulled in over the past 30 days. Freeport said on Sept. 15 the plant remains offline, with no new updates since, while the local power company makes repairs to its system.
Despite the Freeport outage, the amount of gas flowing to U.S. LNG export plants has averaged 10.5 billion cubic feet per day (Bcf/d) so far in September, matching the 10.5 Bcf/d in August, as buyers around the world keep purchasing all the super-chilled gas the United States can produce. That compares with a monthly record of 11.5 Bcf/d in April.
Gas in Europe and Asia traded near $23 and $26 per mmBtu, respectively, compared with just over $5 for the U.S. fuel. Gas at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, has hit record highs this week.
Refinitiv projected average U.S. gas demand, including exports, would fall from 86.6 Bcf/d this week to 85.3 Bcf/d next week as LNG exports decline. Those forecasts were slightly higher than Refinitiv expected on Sept. 15.
About 0.9 Bcf/d, or 39%, of gas production in the U.S. Gulf of Mexico remains shut in since Hurricane Ida, according to government data.
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