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US natural gas futures traded within a few cents of unchanged on Friday as demand forecasts stayed pretty steady from the prior day.

Front-month gas futures for October delivery on the New York Mercantile Exchange were up 0.6 cents, or 0.2%, to $2.544 per million British thermal units at 10:06 am EDT (1406 GMT).

That followed a drop of almost 4% on Thursday, its biggest daily percentage decline since mid July, due to a bigger than expected storage build and reduced forecasts for cooling demand next week.

For the week, the contract was down over 2%, putting the front-month on track to decline for the first week in four.

Even though the weather is expected to remain warmer than normal through early October, traders noted that warmth in late September or early October is a lot cooler than in the middle of the summer. Analysts said persistent mild weather could reduce gas demand because homes and businesses will not need to use air conditioning or heat.

As the weather cools with the coming of autumn, data provider Refinitiv projected average gas demand in the lower 48 US states will drop from 85.5 billion cubic feet per day (bcfd) to 82.0 bcfd next week.

In two week, however, Refinitiv forecast demand would rise to 83.3 bcfd as exports rise.

Gas flows to US liquefied natural gas (LNG) export plants fell to 5.8 bcfd on Friday due to the shutdown of Dominion Energy Inc's Cove Point in Maryland, down from an average of 6.5 bcfd earlier this week, according to Refinitiv data.

Refinitiv projected flows to LNG terminals could rise to around 6.6 bcfd in a couple weeks.

Exports to Mexico, meanwhile, jumped to a record high of 5.6 bcfd this week as gas started to flow through the 2.6-bcfd Valley Crossing and Sur de Texas-Tuxpan pipes after TC Energy Corp and Sempra's IENOVA unit resolved pipeline contract disputes with Mexico's Federal Electricity Commision in late August.

Analysts said utilities likely added 86 billion cubic feet (bcf) of gas to storage during the week ended Sept. 20. That compares with an injection of 51 bcf during the same week last year and a five-year (2014-18) average build of 74 bcf for the period. If correct, the increase would boost stockpiles to 3.189 trillion cubic feet (tcf), 1.9% below the five-year average of 3.252 tcf for this time of year.

Copyright Reuters, 2019


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