U.S. natural gas futures eased about 1 per cent to a two-week low on Thursday on a bigger-than-expected storage build and expectations power generators will burn less gas after Hurricane Milton knocked out power to millions of homes and businesses in Florida.
The U.S. Energy Information Administration (EIA) said utilities added 82 billion cubic feet (bcf) of gas during the week ended Oct. 4.
That was bigger than the 71-bcf build analysts forecast in a Reuters poll and compares with an increase of 85 bcf in the same week last year and a five-year (2019-2023) average rise of 96 bcf for this time of year.
Even though storage injections have been lower than usual in 21 of the past 22 weeks, the amount of gas in inventory was still about 5 per cent above normal levels for this time of year due to low heating demand during the mild winter of 2023-2024.
Before EIA released the storage report, some analysts said if the build was much bigger than expected, it could show that more Permian gas was flowing through the new Matterhorn pipeline in Texas than previously thought.
Milton, meanwhile, slammed into the west coast of Florida as a major storm on Wednesday night and swept across the central part of the state on Thursday. The storm is now in the Atlantic Ocean and is expected to weaken as it heads east toward Bermuda.
Milton has already caused over 3.4 million homes and businesses to lose power in Florida. Those outages will add to the roughly 97,000 customers still without service in North Carolina and Georgia since Hurricane Helene moved inland after hitting Florida on Sept. 26.
In 2023, power generators in Florida burned a record 3.9 billion cubic feet per day of gas to keep the lights on for the state’s roughly 11.5 million power customers, according to data from the U.S. Energy Information Administration and PowerOutage.us.
That means every 1 million customer outages reduces the need to burn around 0.3 bcfd of gas on average.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 2.5 cents, or 0.9 per cent, to $2.635 per million British thermal units at 10:37 a.m. EDT (1437 GMT), putting the contract on track for its lowest close since Sept. 26.
That would be the first time the contract dropped for five straight days since late August. During that time, it was down about 11 per cent.
LSEG said average gas output in the Lower 48 U.S. states fell to 101.2 bcfd so far in October, down from 101.8 bcfd in September. That compares with a record 105.5 bcfd in December 2023.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 96.4 bcfd this week to 96.9 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Wednesday, while the forecast for next week was lower.
Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants slid to an average of 12.4 bcfd so far in October, down from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.
That reduction was due mostly to the planned Sept. 20 shutdown of Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland for around three weeks of annual maintenance, which could end as soon as Oct. 10.