US natural gas futures fell on Thursday as traders booked profits, after prices hit a more than two-month high following a government report showing a smaller-than-expected storage build.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell by 3.4 cents, or about one per cent, to settle at $3.442 per million British thermal units (mmBtu). The contract hit its highest level since July 18 earlier in the session.
The US Energy Information Administration said energy firms added 53 billion cubic feet (bcf) of gas into storage during the week ended September 26. That was smaller than the 68 bcf build analysts forecast in a Reuters poll and compared with a boost of 54 bcf during the same week a year ago and a five-year (2020-2024) average build of 85 bcf for this time of year.
"The market definitely got a boost as the injection into inventory was much smaller than expected. It was a big miss...and I think what we're seeing here is that the demand for fuels was higher than expected last week," said Phil Flynn, senior analyst for Price Futures Group.
Meteorologists forecast the weather will remain mostly warmer than normal through at least October 16. The November contract is expected to find support around $3.40 and will likely trade within a range of $3.36 to $3.47, said Gary Cunningham, director of market research at Tradition Energy.
Financial firm LSEG said average gas output in the Lower 48 states fell to 106.0 billion cubic feet per day (bcfd) so far in October, down from 107.4 bcfd in September and a record monthly high of 108.3 bcfd in August.
LSEG projected average gas demand in the Lower 48 states, including exports, would drop from 101.5 bcfd this week to 99.2 bcfd next week. Meanwhile, US LNG exports hit a record in September at 9.4 million tonnes, beating their previous record of 9.3 million tonnes in August, according to preliminary data from LSEG.
Demand for LNG as a marine fuel will at least double by 2030 as abundant supply and rising emissions regulations spur orders for ships that can run on it, industry executives said.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Nick Zieminski, Bill Berkrot and Jamie Freed)