US natgas prices hit 2-month high on contract expiry, more flows to LNG export plants

By Scott DiSavino

Sept 29 (Reuters) - U.S. natural gas futures climbed about 2% to a two-month high on Monday with the start of a new, more expensive front-month, and as the amount of gas flowing to liquefied natural gas export plants increases.

That increase came despite a rise in daily output, ample amounts of fuel in storage and forecasts for milder weather and less demand over the next two weeks than previously expected.

On its first day as the front-month, gas futures for November delivery NGc1 on the New York Mercantile Exchange rose 6.1 cents, or 1.9%, from where the November contract closed on Friday to settle at $3.267 per million British thermal units (mmBtu).

That put the front-month on track to close at its highest since July 21.

In the cash market, prices at the Waha Hub NG-WAH-WTX-SNL in West Texas and the AECO Hub NG-ASH-ALB-SNL in Alberta remained in negative territory because pipelines in both regions were constrained by expected and unexpected maintenance work.

For the Waha, that was the fourth day in a row and the 13th time this year that prices were in negative territory. For AECO, that was the fifth day in a row that prices were below zero, with each day setting a fresh record low, according to LSEG pricing data.

In the tropics, the U.S. National Hurricane Center projected both Hurricane Humberto (between Bermuda and the Bahamas) and Tropical Storm Imelda (over the Bahamas) would move away from the U.S. East Coast as they head toward Bermuda and then into the open Atlantic Ocean over the next week.

Meteorologists at AccuWeather said they expect Humberto to pull Imelda out to sea, reducing tropical rain and wind impacts in the southeast U.S.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states fell to 107.5 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, however, output was on track to rise to a preliminary three-week high of 108.4 bcfd on Sunday. That compares with an all-time daily high of 109.7 bcfd on July 28. Preliminary data is often revised later in the day.

Record output earlier this year 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 mostly warmer than normal through at least October 14.

That late-season heat will likely reduce gas demand by cutting the amount of fuel used to heat homes and businesses by more than 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 slide from 102.4 bcfd this week to 99.7 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, feedgas to LNG export plants rose to a one-month high of 16.4 bcfd on Saturday as record amounts of gas flow to Venture Global LNG's VG.N 3.2-bcfd Plaquemines plant in Louisiana.