US natgas prices ease on small output increase, lower demand next week

By Scott DiSavino

Nov 13 (Reuters) - U.S. natural gas futures slid about 1% on Wednesday on a small increase in daily output and forecasts for less cold weather and lower heating demand next week than previously expected.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange fell 3.4 cents, or 1.2%, to $2.873 per million British thermal units (mmBtu) at 7:00 a.m. EST (1200 GMT).

Analysts said utilities likely added more gas to storage than usual during the mild week ended Nov. 8, but were so far uncertain whether they would add or pull gas during the week ended Nov. 15 since supply and demand were very close.

There is currently about 6% more gas in storage than normal for this time of year. After weeks of mild weather, analysts said the expected build during the week ended Nov. 8 would be the first time utilities added more gas to storage than usual for four weeks in a row since October 2022. EIA/GAS NGAS/POLL

Prior to the last few weeks, however, injections had been smaller than usual for 14 straight weeks because many producers reduced drilling activities this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low for the month of March. Prices have remained relatively soft since then, dropping to a 23-year low for the month of October.

In the spot market, pipeline constraints caused next-day gas prices at the Waha hub NG-WAH-WTX-SNL in the Permian Shale in West Texas to remain in negative territory for a record 48th time this year.

Analysts have said that Waha prices traded in negative territory on eight of the past nine days due in part to pipeline constraints caused by maintenance on Kinder Morgan's KMI.N Permian Highway gas pipe in Texas, which the company has said it expected to mostly complete on Nov. 14.

Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six times in 2020 and once in 2023.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states slid to 100.1 billion cubic feet per day (bcfd) so far in November, down from 101.3 bcfd in October. That compares with a record 105.3 bcfd in December 2023.

On a daily basis, however, output was on track to rise by about 1.3 bcfd over the past two days to 99.7 bcfd on Wednesday, up from a nine-month low of 98.4 bcfd on Monday.

Meteorologists projected weather in the Lower 48 states will remain warmer than normal through Nov. 20 before turning near normal from Nov. 21-28.

With seasonally colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 107.8 bcfd this week to 109.3 bcfd next week. The forecast for next week was lower than LSEG's outlook on Tuesday.

The amount of gas flowing to the seven big U.S. LNG export plants edged up to an average of 13.2 bcfd so far in November, up from 13.1 bcfd in October. That compares with a monthly record high of 14.7 bcfd in December 2023.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine in February 2022.

Gas prices traded around $14 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and the Japan Korea Marker (JKM) benchmark in Asia JKMc1. NG/EU

(Reporting by Scott DiSavino; Editing by Chizu Nomiyama)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

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For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C