US natgas prices dip 2% to 3-week low on ample storage, milder forecasts

By Scott DiSavino

Sept 18 (Reuters) - U.S. natural gas futures slid about 2% on Friday to a three-week low, on ample amounts of gas in storage and forecasts for milder weather and less demand next week than previously expected.

Front-month gas futures for October delivery NGc1 on the New York Mercantile Exchange fell 5.1 cents, or 1.7%, to settle at $2.888 per million British thermal units (mmBtu), their lowest close since August 27.

That decline put the contract down about 2% for the week after it lost about 4% last week.

In the tropics, the U.S. National Hurricane Center said Tropical Storm Gabrielle in the central Atlantic would strengthen into a hurricane on Sunday as it moves northwest toward Bermuda. The system, however, is expected to turn to the northeast before reaching Bermuda, and is not expected to reach the U.S. mainland.

The NHC also said a tropical wave near the Cape Verde Islands, off the west coast of Africa, had a 20% chance of strengthening into a tropical cyclone over the next week as it moves west across the Atlantic Ocean.

Even though storms can boost gas prices by cutting output along the U.S. Gulf Coast, they are more likely to reduce prices by shutting LNG export plants and knocking out power to homes and businesses. About 40% of the power generated in the U.S. comes from gas-fired plants.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.4 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August.

Record output earlier 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. EIA/GAS NGAS/POLL

Meteorologists forecast the weather will remain warmer than normal through at least October 4.

That late season heat, however, will not necessarily increase gas demand by much since it is more likely to reduce the usual increase in heating demand seen at this time of year rather than boost the amount of gas power generators burn to keep air conditioners humming.

LSEG projected average gas demand in the Lower 48 states, including exports, would hold at 103.0 bcfd this week and next before sliding to 101.8 bcfd in two weeks. The forecast for next week was lower than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants eased to 15.7 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.

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

The U.S. became the world's biggest LNG producer in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.

Gas was trading around $11 per mmBtu at both the Dutch Title Transfer Facility TRNLTTFMc1 benchmark in Europe and the Japan Korea Marker JKMc1 benchmark in Asia. NG/EU