US Natgas Prices Fall to 6-Week Low

US natural gas prices fell to $2.85/MMBtu, their lowest level in nearly two weeks, as forecasts of persistently warm weather point to subdued heating demand, while a slowdown in LNG export activity also weighed on prices. Above-average temperatures are expected across most of the US through November 18, potentially limiting gas consumption. Milder weather and subdued demand have allowed energy companies to inject more gas than usual into storage, with analysts expecting inventories to reach 1.4% above normal in the week ended October 30, up from 1.0% above normal the previous week. Meanwhile, average gas flows to the nine major US LNG export terminals fell to 17.7 bcfd so far in November, down from 18.4 bcfd in October. On the supply side, US producers have reduced production amid low prices.

US natural gas prices rose to around $2.89/MMBtu, driven by tightening production and a slightly colder weather outlook. Lower production over the weekend, particularly in the Appalachia shale region, offered some support and may indicate that producers are adjusting output to the persistently weak price environment. Slightly cooler weather forecasts also provided a modest boost to expectations for heating and power demand as the winter season begins. However, the upside remains constrained by expectations of warmer-than-average conditions across most of the country through November 16, limiting the prospect of a significant increase in consumption. Lower gas flows to LNG export terminals added another headwind, as reduced overseas shipments left more supply available to the domestic market.

US natural gas prices steadied around $2.90/MMBtu, remaining near a one-week low as persistently mild weather and a recovery in domestic production weighed on the market. Meteorologists forecast that temperatures across much of the country would remain mostly warmer than normal during the first half of November, likely keeping heating demand subdued. At the same time, output across the Lower 48 states recovered to an average of around 113.3 bcfd over the past week, improving domestic supply availability. These factors are outweighing support from strong LNG exports and tightening storage levels. Average feedgas flows to the nine major US LNG export terminals rose to 18.5 bcfd in October, up from 17.9 bcfd in September. Meanwhile, the EIA reported a larger-than-expected increase in inventories for the week ended October 23, bringing total stocks to roughly 1% above the five-year average and 3.8% below year-ago levels.