US natgas prices climb 3% on small storage build, higher LNG export flows

By Scott DiSavino

Aug 21 (Reuters) - U.S. natural gas futures climbed about 3% on Thursday on a smaller-than-expected storage build, recent declines in daily output and an increase in gas flows to liquefied natural gas (LNG) export plants.

Front-month gas futures for September delivery NGc1 on the New York Mercantile Exchange rose 7.4 cents, or 2.7%, to settle at $2.826 per million British thermal units (mmBtu). On Wednesday, the contract closed at its lowest since November 8 for a second day in a row.

Thursday's price increase pushed the contract out of technically oversold territory.

The U.S. Energy Information Administration (EIA) said energy firms added 13 billion cubic feet (bcf) of gas into storage during the week ended August 15.

That was smaller than the 22-bcf build analysts forecast in a Reuters poll and compares with an increase of 29 bcf during the same week last year and an average build of 35 bcf over the 2020 to 2024 period. EIA/GAS NGAS/POLL

Analysts said the build was smaller-than-usual due to increased cooling demand during hot weather last week.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states rose to 108.4 billion cubic feet per day so far in August, up from a record monthly high of 107.8 bcfd in July.

On a daily basis, however, output was on track to drop by about 3.6 bcfd to a preliminary six-week low of 106.4 bcfd on Thursday since hitting a daily record high of 109.8 bcfd on July 28.

Meteorologists forecast the weather will remain mostly near normal through September 5, which is about the same as previously expected.

LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 110.8 bcfd this week to 106.8 bcfd next week. Those forecasts were similar to LSEG's outlook on Wednesday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 15.8 bcfd so far in August, up from 15.5 bcfd in July. That compares with a record monthly high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to rise to 15.5 bcfd on Thursday, up from an average of 14.2 bcfd over the prior three days due to reductions at several plants, including Venture Global LNG's 1.6-bcfd Calcasieu in Louisiana, Cameron LNG's 2.0-bcfd plant in Louisiana, and Freeport LNG's 2.1-bcfd plant in Texas.

In the Atlantic basin, meanwhile, the U.S. National Hurricane Center forecast Hurricane Erin, currently located in the ocean between North Carolina and Bermuda, would move northeast off the east coasts of the U.S. and Canada for the next several days.

Erin was expected to cause some tropical storm force winds and rough seas off eastern North Carolina and Virginia over the next 24 hours.