By: Reuters – U.S. natural gas futures fell to their lowest since March on Thursday, after a federal report showed a larger-than-expected storage build last week and as the market is expected to see increases in output.
Front-month gas futures fell 1.9% to settle at $5.358 per million British thermal units, after sliding to $5.253 per mmBtu earlier in the session.
The U.S. Energy Information Administration (EIA) said utilities added 111 billion cubic feet (bcf) of gas to storage during the week ended Oct. 14, more than the 105 bcf build analysts forecast in a Reuters poll and substantially more than the year-ago weekly build of 91 bcf and a five-year (2017-2021) average increase of 73 bcf. It was also the fifth week in a row that stockpiles increased by over 100 bcf.
“It (data) was a little bearish, but it’s not bearish enough to where we should see a massive price swing,” said Robert DiDona of Energy Ventures Analysis.
Looking toward November, “if we don’t see a bullish weather pattern start to set up for the early start of winter, that could result in additional price volatility because we’ll see selling subsequently,” DiDona said.
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Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.5 bcfd so far in October, up from a monthly record of 99.4 bcfd in September.
With milder weather coming, Refinitiv projected average U.S. gas demand, including exports, would fall from 100.6 bcf per day this week to 95.5 bcf per day next week.
Even though natural gas production growth will likely outpace domestic natural gas demand growth in winter 2022-2023, the continued growth in net exports and reduced natural gas storage inventories are expected to place additional upward pressure on natural gas prices this winter, the Federal Energy Regulatory Commission (FERC) said on Thursday. read more
Despite the recent losses, U.S. gas futures remain up about 42% this year as soaring global gas prices have fed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s Feb. 24 invasion of Ukraine.
Gas was trading at $34 per mmBtu in Europe and $30 in Asia .
U.S. gas futures lag far behind global prices because the United States is the world’s top producer with all the fuel it needs for domestic use, while capacity constraints and the outage at a Freeport liquified natural gas (LNG) facility limit U.S. exports of LNG.