Record Production Dampens US Natural Gas Prices in October 2023
- 25-Oct-2023 5:46 PM
- Journalist: Bob Duffler
Texas (USA): US Natural gas prices have reached a position of three-week low due to record production, ample storage, and lower heating demand in American territories.
Gas contract prices for November delivery in NYMAX (New York Mercantile Exchange) have been closed at their lowest since October 2. According to the US Commodity Futures Trading Commission's Commitment of Traders report, after falling for eight consecutive days, the future prices have remained unchanged at USD 2.89 per MMBtu on Friday. As of October 20, Natural Gas spot prices in the North American market have been closed at USD 3.08 per MMBtu, Ex-Louisiana, with a drop of 8.1% against last week.
Average Natural Gas production in the lower 48 states of America registered a volume of 103.7 billion cubic feet per day (bcfd) in October, up from 102.4 bcfd the previous month. Even though, as per Meteorologists, the weather has remained milder than normal and witnessed a seasonal change towards cooler winter. Despite that forecast, spot prices of Natural Gas have been traded far below contract prices, signaling a bearish demand.
It has been reported that the export of Natural Gas to Mexico through the pipeline has slipped to an average of 6.9 bcfd in October, down from a record volume of 7.2 billion cubic Natural Gas per day in September. Analysts, however, have predicted the exports to rise since New Fortress Energy's Altamira plant has been about to convert US and Mexican gas into Liquified Natural Gas (LNG) to export.
Moreover, Natural gas supply to seven big US LNG plants has risen to 13.4 bcfd in October, increased from 12.2 bcfd in September. Furthermore, the averting workers' strike in Australia has also supported eliminating supply concerns amid the upcoming winter.
US EIA Reports Major Boost in Natural Gas Storage - Addition of 96 Billion Cubic Feet in the Week Ending October 13 Ensures Plentiful Market Supply.
Lesser spot or next-day prices have weighed on the future Natural gas markets. Since spot prices of Natural Gas have remained far below future contracts, traders might buy at spot Natural Gas and sell at contracts to lock in arbitrage profits. Natural gas prices have gained about 2% to reach USD 2.65 per MMBtu at the Henry Hub. On other locations, such as at the Waha hub in west Texas, Natural Gas spot prices have fallen by about 90% to around 11 cents per MMBtu.
Note that the US has been in a race with the World's leading suppliers of Natural Gas, such as Australia and Qatar, to become the World's biggest LNG supplier in 2023.
