US natural gas prices are holding close to a one-week high as stronger demand forecasts and rising LNG exports improve the near-term outlook for the market.
November natural gas futures increased 1.3 cents, or 0.4%, to $3.048 per million British thermal units, putting prices on track for their highest close since 25 September.
The latest gains come as forecasts for US natural gas demand have been revised higher, adding support to prices despite relatively moderate weather conditions across much of the country.
Demand is expected to average around 106.2 billion cubic feet per day across the Lower 48 states, including exports, this week and next. Both forecasts have been raised, pointing to a firmer demand environment as the market moves further into the autumn.
LNG exports are providing an important source of additional demand. Gas flows to US LNG export facilities are expected to increase, with daily feedgas demand forecast to reach around 17.6 billion cubic feet per day.
US natural gas production has also eased from recent record levels, providing additional support to the balance between supply and demand. Lower 48 production averaged 111.7 billion cubic feet per day during October so far, compared with record levels of 113.3 billion cubic feet per day in both August and September.
Production was expected to fall further to around 109.3 billion cubic feet per day on Monday following an outage affecting a pipeline in Kentucky.
The tighter near-term supply picture comes against a backdrop of exceptionally strong underlying production. US natural gas output reached record levels earlier in the year, demonstrating the industry’s ability to meet growing domestic and export demand.
Diversified Energy Company plc (LON:DEC, NYSE:DEC) is an independent energy company engaged in the production, marketing, transportation and retirement of primarily natural gas and natural gas liquids related to its U.S. onshore upstream and midstream assets.
