U.S. natural gas futures climbed almost 4% to a 20-month high on Oct. 21 as LNG exports rise and output eases.

Front-month gas futures rose 11 cents, or 3.8%, to settle at $3.023/MMBtu. That was their first close over $3 since January 2019 and puts the contract up almost 70% from a recent low of $1.795 on Sept. 21.

Data provider Refinitiv said output in the Lower 48 U.S. states averaged 86.2 Bcf/d so far in October. That would be the lowest in a month since September 2018 and puts output on track to drop for a fourth month in a row for the first time since June 2016, according to Refinitiv and federal energy data. Output hit an all-time high of 95.4 Bcf/d in November 2019.

Those production declines come as low prices earlier in the year due to coronavirus demand destruction caused energy firms to shut oil and gas wells and cut back on new drilling by so much that output from new wells no longer offsets existing well declines.

As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 90 Bcf/d this week to 97.7 Bcf/d next week.

The amount of gas flowing to LNG export plants has averaged 7 Bcf.d so far in October, up from 5.7 Bcf/d in September.

That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 Bcf/d as rising global gas prices prompt buyers to reverse cargo cancellations.

Gas prices in Europe and Asia were trading at their highest since November 2019 and October 2019, respectively.

Source: Reuters

 U.S. Natgas Storage (Bcf)

 Week ended
Oct. 16

 Week ended
Oct. 9
 Year ago
Oct. 16
Oct. 16
+52   +46 +92  +75
Source: Reuters

 U.S. Natural Gas Next-day Prices
($ per MMBtu)

Hub Current Day Prior Day
Henry Hub $2.57 $2.30
Transco Z6 New York $1.48 $1.28
PG&E Citygate $4.22 $4.10
Dominion South $1.31 $1.12
Chicago Citygate $2.72 $2.42
Algonquin Citygate $2.07 $1.60
SoCal Citygate $4.68 $3.49
Waha Hub $0.62 $0.48