US natgas holds at 4-week high on recent declines in output

By Scott DiSavino

Sept 4 (Reuters) - U.S. natural gas futures held near a four-week high on Thursday on recent declines in output.

Front-month gas futures for October delivery NGc1 on the New York Mercantile Exchange rose 1.0 cent, or 0.3%, to settle at $3.074 per million British thermal units, their highest close since August 6.

The price rise, which pushed the contract into technically overbought territory for the first time since June, put the front-month up for a seventh day in a row for the first time since February. The contract has climbed about 14% over those seven days.

A bigger-than-usual storage build, recent declines in flows to liquefied natural gas (LNG) export plants and forecasts for less demand next week than previously expected failed to materially move prices.

The U.S. Energy Information Administration (EIA) said energy firms injected 55 billion cubic feet (bcf) of gas into storage during the week ended August 29.

That was close to the 56-bcf build analysts forecast in a Reuters poll and compares with an increase of 16 bcf during the same week last year and an average build of 36 bcf over the past five years. EIA/GAS NGAS/POLL

In the tropics, the U.S. National Hurricane Center projected a disturbance in the central Atlantic Ocean had a 90% chance of strengthening into a tropical cyclone over the next week as it heads west toward the Caribbean Islands.

Meteorologists at AccuWeather, meanwhile, said a lack of storms has allowed water temperatures in the Gulf of Mexico to surge to near record levels, increasing the risk of rapid intensification of a tropical storm or hurricane if it forms or enters the Gulf.

AccuWeather has predicted there would be 13 to 18 named storms in the June-November hurricane season, including seven to 10 hurricanes and three to five major hurricanes. So far, there have been six named storms with only Erin strengthening into a major hurricane.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states has fallen to 107.2 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.

On a daily basis, output was on track to drop even further to a preliminary eight-week low of 105.7 bcfd on Thursday. That figure compares with a daily record high of 109.6 bcfd on July 28. Preliminary data, however, is often revised later in the day.

Meteorologists forecast the weather will remain mostly near normal through September 19, consistent with previous expectations.

LSEG projected average gas demand in the Lower 48 states, including exports, would decline from 104.6 bcfd this week to 102.3 bcfd next week. The forecast for next week was lower than LSEG's outlook on Wednesday.

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. This month's figure 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 15.5 bcfd on Thursday, down from an average of 15.8 bcfd last week due to decreases at some plants, including Cheniere Energy's LNG.N 3.9-bcfd Corpus Christi facility in Texas and Venture Global LNG's VG.N 1.6-bcfd Calcasieu facility in Louisiana. That figure compares with a daily LNG feedgas record of 17.3 bcfd on April 9.

The decline in daily LNG feedgas occurred even though flows to Venture Global LNG's VG.N 3.2-bcfd Plaquemines plant in Louisiana rose to a record 3.3 bcfd on Wednesday. LNG plants can pull in more gas than they can convert into LNG since they use some of it 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.