US natgas prices hold near 1-week high ahead of Labor Day weekend on rising LNG feedgas

By Scott DiSavino

Aug 30 (Reuters) - U.S. gas futures held a one-week high on Friday ahead of the long U.S. Labor Day holiday weekend as a bullish rise in gas flows to liquefied gas (LNG) export plants offset bearish forecasts for slightly less heat over the two weeks than previously expected.

LNG feedgas rose with the return to full service of Freeport LNG's plant in Texas following an unexpected shutdown on Wednesday. Less heat means power generators will have to burn as much gas to produce electricity to keep air conditioners humming.

Another factor that has weighed on gas prices for much of this year was the tremendous oversupply of fuel left in storage after a mild winter.

There was still about 12% more gas in storage than for this time of year even though injections have been smaller than usual in 15 of the past 16 weeks after extremely low prices in the spring prompted several producers to cut output. EIA/GAS NGAS/POLL

Front-month gas futures NGc1 for October delivery on the New York Mercantile Exchange remained unchanged at $2.136 per million British thermal units (mmBtu) at 9:13 a.m. EDT (1313 GMT), putting the contract on track for its highest close since Aug. 21 for a second day in a row.

For the week, the front-month was up about 5% after falling about 5% last week.

For the month, the contract was up about 5% after falling about 22% in July, the biggest monthly decline since January 2023.

In the spot market, pipeline constraints caused -day gas prices at the Waha hub NG-WAH-WTX-SNL in the Permian Shale in West Texas to fall to an all-time low and average in territory for a record 32nd time this year.

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 gas output in the Lower 48 U.S. states slid to an average of 102.4 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July.

Meteorologists forecast weather across the country would remain mostly hotter than through Sept. 14. Energy traders, however, that hot weather at the start of September would only average around 77 degrees F (25.0 Celsius), versus 83 F (28.3 C) at the start of August.

LSEG forecast average gas demand in the Lower 48, including exports, will fall from 105.9 bcfd this week to 103.0 bcfd week and the week after. The forecast for week was higher than LSEG's outlook on Thursday.

Gas flows to the seven big U.S. LNG export plants rose to an average of 12.8 bcfd so far in August, up from 11.9 bcfd in July. 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.

Gas prices were trading around $13 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $14 at the Japan Korea Marker (JKM) benchmark in Asia JKMc1. NG/EU

(Reporting by Scott DiSavino; Editing by Kirsten Donovan)

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

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

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

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

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

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

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

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

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

To determine CFTC managed money  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