Natural gas production rose and demand expectations fell, and U.S. natural gas futures fell to a one-week low

U.S. natural gas futures fell to a new low in the past week on Monday as natural gas production rose, demand for next week was lower than previously forecast, and there was a growing belief that the U.S. would have enough natural gas reserves for winter heating.

U.S. natural gas futures fell more than 4 percent on Monday, closing at $5.186/million BP, data showed. It is now up slightly by 0.58%.

Statistics show that U.S. LNG exports remain strong as weather is expected to cooler this week, heating demand will exceed previous expectations, and European gas prices will rise by 12%. However, the price of US natural gas futures still fell.

Global gas prices have soared to record highs since the summer of this year as utilities scramble to snap up LNG to replenish europe's low inventories and meet growing demand in Asia.

Driven by expectations that LNG demand will remain strong in the coming months, U.S. natural gas futures prices climbed to a 12-year high in early October.

However, compared to overseas markets, the increase in natural gas prices in the United States has been dampened by the fact that the United States has sufficient natural gas reserves for winter use, as well as sufficient production to meet domestic and foreign demand. Compared to other markets, the current price in The European and Asian markets is about five times that of the United States.

Analysts expect U.S. natural gas inventories to reach 3.6 trillion cubic feet ahead of the start of the winter heating season in November. While below the 5-year average of 3.7 trillion cubic feet, it's still plenty.

In addition, current U.S. natural gas inventories are about 3 percent below the five-year average. In contrast, analysts say European inventories are about 15 percent below normal levels.

Speculators have reduced their net long positions on the New York Mercantile Exchange and Intercontinental Exchange to their lowest levels since June 2020 as U.S. natural gas inventories continue to rise as U.S. natural gas inventories continue to rise.

Data provider Refinitiv said the average U.S. production in 48 states was 94.1 billion cubic feet per day in October, up from 92.7 billion cubic feet per day in September and the monthly record of 95.4 billion cubic feet per day in November 2019.

On October 29, production reached 962 cubic feet per day, the highest level since the record of 966 cubic feet per day was set in November 2019.

In response, Refinitiv expects the average U.S. natural gas demand (including exports) to rise from 96.4 billion cubic feet per day this week to 100.4 billion cubic feet per day next week as more households and businesses increase their use of heating equipment. Refinitiv's expectations for this week were higher than last Friday's, while expectations for next week were lower than before.

In addition, as of now, the average flow of natural gas to U.S. LNG export plants in October was 10.5 billion cubic feet per day, up from 10.4 billion cubic feet per day in September.

On October 29, feed gas for LNG export plants reached 11.8 billion cubic feet per day, the highest level since May.

With natural gas prices approaching $24/MMB in Europe, asia approaching $30/MMBther, and the US at about $5/MMBtu, traders expect global buyers to continue to buy all LNG produced in the US.

But no matter how high global gas prices rise, the U.S. only has the ability to convert about 10.5 billion cubic feet of natural gas into liquefied natural gas. The remaining natural gas flowing to the export plant will be used as fuel for the power plant and other equipment within the plant.

This article originated from Zhitong Finance Network