US natgas prices hold near 3-week high on demand forecast, rising oil futures

By Scott DiSavino

September 2 (Reuters) - U.S. natural gas futures held near a three-week high on Tuesday on forecasts for higher demand this week than previously expected and a sharp increase in other energy futures.

That lack of gas price movement came despite near-record output, ample supplies of gas in storage, a small decline in flows to liquefied natural gas export plants, and forecasts for milder weather and lower demand next week than previously expected.

Front-month gas futures for October delivery NGc1 on the New York Mercantile Exchange rose 1.2 cents, or 0.4%, to settle at $3.009 per million British thermal units, their highest close since August 7 for a second day in a row. U.S. markets were closed for the Labor Day holiday on Monday.

That small gas price increase put the front-month up for a fifth day in a row for the first time since February.

Oil CLc1, LCOc1 futures rose after the U.S. imposed sanctions targeting Iran's oil revenue stream, and ahead of an OPEC+ meeting on Sunday in which analysts expect the group will not unwind remaining voluntary cuts. O/R

In the tropics, the U.S. National Hurricane Center projected a disturbance in the Atlantic Ocean near the Cape Verde Islands had a 70% chance of strengthening into a tropical cyclone as it heads west toward the Caribbean Islands over the next week.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.6 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.

Record output has allowed energy companies to inject more gas into storage than usual this summer. Analysts said there was about 5% more gas in storage than normal for this time of year and expected that amount to grow in the coming weeks. EIA/GAS NGAS/POLL

Meteorologists forecast the weather will remain mostly near normal through September 17, which is about the same as previously expected.

LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 104.4 bcfd this week to 103.9 bcfd next week. The forecast for this week was higher than LSEG's outlook on Friday, while the forecast for next week was lower.

The average amount of gas flowing to the eight big U.S. LNG export plants has slid to 15.6 bcfd so far in September, down from 15.8 bcfd in August. That compares with a monthly record high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to ease to 15.6 bcfd on Tuesday from an average of 15.8 bcfd last week due to decreases at a couple of plants, including Cheniere Energy's LNG.N 3.9-bcfd plant in Corpus Christi, Texas, and Cameron LNG's 2.0-bcfd plant in Louisiana.

That decline in daily LNG feedgas came even though flows to Venture Global LNG's VG.N 3.2-bcfd Plaquemines plant in Louisiana were on track to rise to a record 3.3 bcfd on Tuesday. LNG plants can pull in more gas than they can turn into LNG since they use some to fuel liquefaction and other equipment.

In other LNG news, Berkshire Hathaway Energy's 0.8-bcfd Cove Point plant in Maryland is scheduled to shut around September 15 for about a month of planned annual autumn maintenance.