US natural gas futures steady despite near-record LNG export flows

U.S. natural gas futures held steady on Wednesday on little changes in daily output or weather and demand forecasts for the next two weeks.

That price stability came despite near-record gas flows to liquefied natural gas export plants and forecasts that hotter-than-normal weather will last through late August.

The heat means homes and businesses will likely keep their air conditioners cranked up until the end of the month, forcing power generators to burn more gas than usual for this time of year. More than 40% of the electricity produced in the U.S. comes from gas-fired power plants.

Front-month gas futures for September delivery NG1! on the New York Mercantile Exchange fell 0.1 cent, or 0.2%, to $3.004 per million British thermal units at 8:50 a.m. EDT (1250 GMT).

In a sign that the market is not worried about having enough gas supplies this winter, the premium of futures for March over April 2026 NGH26-J26, which the industry calls the widow maker, was on track to fall to a record low on Wednesday.

The industry calls the March-April spread the "widow maker" because rapid price moves resulting from changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.

The industry uses the March-April and October-November (NGV25-X25) spreads to bet on winter weather forecasts and supply and demand since March is the last month of the winter heating season when utilities pull gas out of storage and October is the last month of the summer cooling season when utilities inject gas into storage.

Despite a hotter-than-usual summer, record output has allowed energy firms to inject more gas into storage than usual in recent months. Analysts said gas stockpiles were currently around 7% above normal for this time of year and would likely keep growing in coming weeks.

In the Atlantic Ocean, meanwhile, the U.S. National Hurricane Center said there were two disturbances that could turn into tropical cyclones over the next week - one with a 40% chance of forming off the coasts of North and South Carolina and one with a 60% chance of forming in the North Central Atlantic.

SUPPLY AND DEMAND

LSEG said average gas output in the Lower 48 states eased to 107.8 billion cubic feet per day (bcfd) so far in August, down from a monthly record high of 107.9 bcfd in July.

On a daily basis, output was on track to drop to a preliminary four-week low of 106.0 bcfd on Wednesday, down about 3.7 bcfd since hitting a daily record high of 109.7 bcfd on July 28. Preliminary data, however, is often revised later in the day.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 105.6 bcfd this week to 110.3 bcfd next week. The forecast for this week was higher than LSEG's outlook on Tuesday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.1 bcfd so far in August, up from 15.5 bcfd in July. That compares with a monthly record high of 16.0 bcfd in April.

On a daily basis, LNG export feedgas was on track to rise to a 16-week high of 16.7 bcfd on Wednesday after Freeport LNG's 2.1-bcfd export plant in Texas exited last week's outages and Venture Global LNG's VG 3.2-bcfd Plaquemines plant in Louisiana pulled in a record 3.2 bcfd. That compares with a total daily LNG feedgas record high of 17.3 bcfd on April 9.