Us natural gas futures rose 3 per cent

U.S. natural gas futures edged up about 3 percent on Tuesday as short sellers took profits after the contract fell about 16 percent over the previous three sessions, as rising global prices kept U.S. LNG export demand strong. The price rise came despite rising production, a forecast for milder weather next week than previously expected lower demand for heating.

Global natural gas prices surged to a record high in October as utilities rushed to buy LNG cargoes to replenish low inventories in Europe meet growing demand in Asia. Us futures prices also rose, hitting a 12-year high in early October on expectations LNG demand will remain strong in the coming months.

However, compared with overseas markets, price increases in the United States have been subdued because the United States has sufficient winter gas reserves sufficient production to meet domestic export demand. Gas prices in Europe Asia are about five times those in the United States. Analysts expect inventories to exceed 360 million cubic feet by the time the winter heating season begins in November. That would be a comfortable level, though below the five-year average, they said.

U.S. inventories are about 3% below their five-year average for this time of year. In Europe, analysts say inventories are about 15 per cent below normal levels. Natural gas futures rose 15.3 cents, 3.0 percent, to $5.339 per million British thermal units at 6:57 a.m. Edt (10:57 GMT).

On Monday, the contract closed at its lowest since Oct. 21.

Production across the lower 48 states averaged 94.9 billion cubic feet per day in November, up 94.1 billion cubic feet per day in October, data provider Refinitiv said. That compares with a monthly record of 95.4 BCF/d in November 2019. Refinitiv expects U.S. gas demand, including exports, to average around 96.4 billion cubic feet per day this week next. The forecast for next week is well below Refinitiv's forecast on Monday.

So far in November, gas flows to U.S. LNG export plants have averaged 11 BCF/d, up 10.5 BCF/d in October. That compares with a monthly record of 11.5 BCF/d in April.

With gas prices near $23 per million British thermal units in Europe, nearly $29 per million British thermal units in Asia about $5 per million British thermal units in the United States, traders say global buyers will continue to buy all the LNG the United States can produce. But no matter how high global gas prices rise, the U.S. can only convert about 10.5 BCF/d of natural gas to LNG per day. The rest of the gas that goes to export plants is used to fuel equipment that produces liquefied natural gas.

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Source: Sinopec News

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