September 20, 2019 / 2:41 PM / 24 days ago

U.S. natgas futures steady on unchanged weather, demand forecasts

(Reuters) - U.S. natural gas futures traded within a few cents of unchanged on Friday as demand forecasts stayed mostly steady from the prior day.

Front-month gas futures for October delivery on the New York Mercantile Exchange fell 0.4 cents, or 0.2%, to settle at $2.534 per million British thermal units.

That followed a drop of almost 4% on Thursday, its biggest daily percentage decline since mid July, due to a bigger than expected storage build and reduced forecasts for cooling demand next week.

For the week, the contract lost about 3%, putting the front-month down for the first time in four weeks.

Even though the weather is expected to remain warmer than normal through early October, traders noted that late September or early October are still a lot cooler than the middle of the summer. But analysts said persistent mild weather could reduce gas demand because homes and businesses will not need to use air conditioning or heat.

As the weather cools with the coming of autumn, data provider Refinitiv projected average gas demand in the lower 48 U.S. states will drop from 85.5 billion cubic feet per day (bcfd) to 82.0 bcfd next week.

In two weeks, however, Refinitiv forecast demand would rise to 83.3 bcfd as exports increase.

Gas flows to U.S. liquefied natural gas (LNG) export plants fell to 5.8 bcfd on Friday due to the shutdown of Dominion Energy Inc’s Cove Point in Maryland, down from an average of 6.5 bcfd earlier this week, according to Refinitiv data.

Refinitiv projected flows to LNG terminals could rise to around 6.6 bcfd in a couple weeks.

Exports to Mexico, meanwhile, jumped to a record high of 5.6 bcfd this week as gas started to flow through the 2.6-bcfd Valley Crossing and Sur de Texas-Tuxpan pipes after TC Energy Corp and Sempra’s IENOVA unit resolved pipeline contract disputes with Mexico’s Federal Electricity Commision in late August.

Analysts said utilities likely added 86 billion cubic feet (bcf) of gas to storage during the week ended Sept. 20. That compares with an injection of 51 bcf during the same week last year and a five-year (2014-18) average build of 74 bcf for the period. [EIA/GAS]

If correct, the increase would boost stockpiles to 3.189 trillion cubic feet (tcf), 1.9% below the five-year average of 3.252 tcf for this time of year.

Reporting by Scott DiSavino; Editing by David Gregorio and Tom Brown

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