US natural gas futures held near a nine-month low on Wednesday as forecasts for higher demand over the next two weeks and rising gas flows to liquefied natural gas (LNG) export plants offset near-record output and ample fuel in stockpiles.
Front-month gas futures for September delivery on the New York Mercantile Exchange fell 0.4 cents, or 0.1 per cent, to $2.762 per million British thermal units at 09:37 EDT (13:37 GMT), putting the contract on track for its lowest close since November 8 for a second day in a row. That price decline kept the front-month in technically oversold territory for a second day in a row.
Financial firm LSEG said average gas output in the Lower 48 states rose to 108.4 billion cubic feet per day so far in August, up from a record monthly high of 107.8 bcfd in July. Meteorologists forecast the weather will remain mostly near normal through September 4, which is about the same as previously expected.
Despite hotter-than-usual weather earlier in the summer, record output allowed energy companies to inject more gas into storage than usual in recent months. Analysts said there was about six per cent more gas in storage than normal for this time of year and predicted inventories would keep growing at a faster than usual pace in coming weeks.
LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 111 bcfd this week to 106.6 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday. The average amount of gas flowing to the eight big US LNG export plants rose to 15.8 bcfd so far in August, up from 15.5 bcfd in July. That compares with a record monthly high of 16 bcfd in April.
On a daily basis, LNG export feedgas was on track to rise to 15.3 bcfd on Wednesday from a two-week low of 14.2 bcfd on both Monday and Tuesday due to reductions at several plants, including Cheniere Energy's 4.5-bcfd Sabine Pass in Louisiana, Cameron LNG's two-bcfd plant in Louisiana, and Freeport LNG's 2.1-bcfd plant in Texas.
The US National Hurricane Center (NHC) projected Hurricane Erin, which was in the Atlantic Ocean between Florida and Bermuda, would move northeast off the US East Coast for the rest of the week without hitting land. The storm, however, could cause some tropical storm force winds in eastern North Carolina and Virginia over the next 24 hours. The NHC said two other systems in the Atlantic Ocean - one with a 60 per cent chance and one with a 40 per cent chance - could strengthen into cyclones over the next week.
Both systems, however, were expected to remain far from the US mainland, at least for the next week or so. Even though storms can boost gas prices by knocking Gulf of Mexico gas production out of service, analysts have said storms are more likely to cut demand and prices by shutting LNG export plants and knocking power out to millions of homes and businesses, reducing the amount of gas that electric generators need to burn. Only about two per cent of all US gas comes from the federal offshore Gulf of Mexico, while more than 40 per cent of the electricity produced in the US comes from gas-fired power plants.
(Reporting by Scott DiSavino in New York Editing by Tomasz Janowski)