U.S. natgas futures edge up on near record LNG exports

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The pier at Dominion's Cove Point liquefied natural gas (LNG) plant on Maryland's Chesapeake Bay is seen in this picture taken February 5, 2014. REUTERS/Timothy Gardner/File Photo

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Nov 18 (Reuters) - U.S. natural gas futures edged up about 2% on Thursday as liquefied natural gas (LNG) exports climbed to near record highs as the sixth liquefaction train at Cheniere Energy Inc's (LNG.A) Sabine Pass export plant in Louisiana continues to ramp up.

The market pared bigger gains from earlier in the day after the release Thursday morning of a federal report showing an expected unusual mid-November build in gas stockpiles. Utilities usually start drawing gas out of inventories at this time of year.

The U.S. Energy Information Administration said utilities added 26 billion cubic feet (bcf) of gas into storage during the week ended Nov. 12.

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That was in line with the 25-bcf build analysts forecast in a Reuters poll and compares with an increase of 28 bcf in the same week last year and a five-year (2016-2020) average decline of 12 bcf.

Last week's injection boosted stockpiles to 3.644 trillion cubic feet (tcf), or 2.2% below the five-year average of 3.725 tcf for this time of year.

U.S. LNG exports were rising just in time to help Europe refill gas stockpiles after prices in Europe soared over 25% earlier this week as governments there worry Russian gas company Gazprom PAO (GAZP.MM) may not deliver enough fuel for this winter. Those worries came after Germany's energy regulator suspended the approval process for Gazprom's Nord Stream 2 gas pipeline from Russia to Germany. read more

Global gas prices hit record highs over the past couple of months as utilities around the world scramble for LNG cargoes to replenish extremely low stockpiles in Europe and meet insatiable demand in Asia, where energy shortfalls have caused power blackouts in China.

Following those global gas prices, U.S. futures climbed to a 12-year high in early October on expectations LNG demand would remain strong for months. But overseas prices were still trading over six times higher than U.S. futures because the United States has plenty of gas in storage and ample production.

Analysts have said European inventories were about 17% below normal for this time of year, compared with just 2% below normal in the United States.

After dropping 7% on Wednesday, front-month gas futures rose 8.6 cents, or 1.8%, to settle at $4.902 per million British thermal units (mmBtu) on Thursday.

Data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.0 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and the monthly record of 95.4 bcfd in November 2019.

Refinitiv projected average U.S. gas demand, including exports, would jump from 104.2 bcfd this week to 112.2 bcfd next week as the weather turns colder and homes and businesses crank up their heaters. That is the same as Refinitiv's forecast on Wednesday.

The amount of gas flowing to U.S. LNG export plants averaged 11.1 bcfd so far in November, up from 10.5 bcfd in October. That compares with a monthly record of 11.5 bcfd in April. read more

On a daily basis, feed gas to the LNG plants was expected to reach 11.97 bcfd on Thursday, the highest in a day since a record 11.99 bcfd hit in late March.

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Reporting by Scott DiSavino; editing by Jonathan Oatis and Steve Orlofsky

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