US natgas climbs 3% to 6-week high on lower output, Freeport LNG return

By Scott DiSavino

Sept 8 (Reuters) - U.S. natural gas futures climbed about 3% to a six-week high on Monday on recent declines in output and an increase in flows to liquefied natural gas (LNG) export plants with the expected return to full service of Freeport LNG's plant in Texas.

Front-month gas futures for October delivery NGc1 on the New York Mercantile Exchange rose 8.8 cents, or 2.9%, to $3.136 per million British thermal units at 8:50 a.m. EDT (1250 GMT), putting the contract on track for its highest close since July 22.

That price increase came despite forecasts for lower demand over the next two weeks than previously expected and ample supplies of gas in storage.

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.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.7 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.

Record output so far this year has allowed energy companies to inject more gas into storage than usual so far this summer. There was about 6% more gas in storage than normal for this time of year, and analysts said they expect that amount to grow in coming weeks. EIA/GAS NGAS/POLL

Meteorologists forecast the weather will remain warmer than normal through September 23. That warmer weather, however, is expected to offset the usual rise in heating demand that starts around this time of year. Homes and businesses burn more gas for heating during the winter than energy firms burn in power plants to produce electricity for air conditioning.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.7 bcfd this week to 103.3 bcfd next week. Those forecasts were lower than LSEG's outlook on Friday.

The average amount of gas flowing to the eight big U.S. LNG export plants held around 15.8 bcfd so far in September, the same as 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 a one-week low of 15.7 bcfd on Monday due to recent decreases at some plants, including Cheniere Energy's LNG.N 3.9-bcfd Corpus Christi facility in Texas, Venture Global LNG's VG.N 1.6-bcfd Calcasieu facility in Louisiana and Freeport LNG's 2.1-bcfd plant in Texas.

That 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 3.4 bcfd on Saturday. 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.