US natural gas prices ease to one-week low as storage remains high

• Gas storage levels about 5% above normal, easing supply concerns
• Seasonally cold weather forecast to boost heating demand
• LNG export feedgas hits all-time high

By Scott DiSavino

Oct 24 (Reuters) - U.S. natural gas futures eased about 1% to a one-week low on Friday on a small output increase in recent days and ample amounts of fuel in storage.

Forecasts for more demand over the next two weeks than previously expected and near-record flows of gas to liquefied natural gas export plants weighed on prices.

Front-month gas futures for November delivery NGc1 on the New York Mercantile Exchange fell 2.1 cents, or 0.6%, to $3.323 per million British thermal units (mmBtu), putting the contract on track for its lowest close since October 17.

For the week, the contract was up about 10% after sliding about 3% last week and 7% two weeks ago.

The U.S. National Hurricane Center projected Tropical Storm Melissa would strengthen into a hurricane on Saturday as it slowly heads north and then west across the Caribbean Sea near Jamaica before continuing north toward Cuba by the middle of next week. The system is not currently expected to reach the U.S. mainland during that time.

Even though storms can boost U.S. 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

LSEG said average gas output in the Lower 48 states has fallen to 106.7 billion cubic feet per day (bcfd) so far in October, down from 107.4 bcfd in September and a record monthly high of 108.0 bcfd in August.

Record output earlier this year allowed energy companies to inject more gas into storage than usual. There is currently about 5% more gas in storage than normal for this time of year. EIA/GAS NGAS/POLL

Meteorologists forecast temperatures across the country will remain mostly near-normal through November 8.

With the weather turning seasonally colder, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.7 bcfd this week to 107.8 bcfd next week and 108.5 bcfd in two weeks. The forecast for next week was higher than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 16.5 bcfd so far in October, up from 15.7 bcfd in September and a monthly record high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas hit an all-time high of 17.29 bcfd on Thursday, topping the prior record of 17.28 bcfd on April 9, with flows to Venture Global LNG's VG.N 3.2-bcfd Plaquemines plant in Louisiana at a record 3.7 bcfd. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment.