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US natural gas futures edged up on Friday to their highest in a week on forecasts heating demand and liquefied natural gas (LNG) exports will rise in a couple of weeks as the weather cools.

Front-month gas futures for November delivery on the New York Mercantile Exchange rose 2.3 cents, or 1%, to settle at $2.352 per million British thermal units, their highest close since September 27.

Despite gains of nearly 5% over the past two days, the contract ended down about 2% for the week. Prices sank early in the week as rising production boosted the amount of gas in storage to near normal levels.

Data provider Refinitiv projected gas demand in the lower 48 US states would rise from 82.8 billion cubic feet per day (bcfd) next week to 84.6 bcfd in two weeks with heating and LNG exports expected to rise more quickly than power generator cooling demand declines.

That compares with a projected 85.5 bcfd this week.

Gas flows to LNG export plants eased to 5.8 bcfd on Thursday from an average of 6.3 bcfd last week, due to small declines at Cheniere Energy Inc's Sabine Pass in Louisiana and Freeport LNG's Freeport in Texas, according to Refinitiv data.

Over the next two weeks, however, Refinitiv projected LNG exports would rise to record highs around 6.8 bcfd when Dominion Energy Inc's Cove Point in Maryland returns to service.

On Thursday, the US Energy Information Administration (EIA) reported a storage build of 112 billion cubic feet for the week ended September 27, which was much bigger than the 105 bcf analyst forecast in a Reuters poll.

Analysts said utilities likely added 88 bcf of gas to storage during the week ended October 4. That compares with an injection of 91 bcf during the same week last year and a five-year (2014-18) average build of 89 bcf for the period.

If correct, that increase would boost stockpiles to 3.405 trillion cubic feet (tcf), 0.6% below the five-year average of 3.424 tcf for this time of year.

The amount of gas in inventory has remained below the five-year average since September 2017. It fell as much as 33% below that in March 2019. But with production near a record high, analysts said stockpiles should reach a near-normal 3.7 tcf by the end of summer injection season on October 31.

Copyright Reuters, 2019


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