Houston — NYMEX September natural gas futures rose 3.7 cents Friday to settle at $2.853/MMBtu, with the market finding support as supply concerns become more imminent going into winter.
The front-month contract traded between $2.814/MMBtu and $2.862/MMBtu Friday.
US dry gas production is expected to fall 100 MMcf day on day to 79.9 Bcf Friday, the third straight day dry gas output has been below 80 Bcf, according to S&P Global Platts Analytics.
Dry gas output is at record levels, but recent power burn demand is inhibiting its impact on reducing the US storage deficit. Total stocks are 688 Bcf below year-ago inventories and 565 Bcf below the five-year average, according to US Energy Information Administration data.
The market seems to be responding to supply concerns, sources say, with the front-month rising about 10 cents over the past two trading days.
A fourth straight lower-than-expected storage injection in the week that ended July 27 is the result of the market underestimating exports to Mexico, according to Platts Analytics.
Exports to Mexico are averaging 4.4 Bcf/d so far this year, 300 MMcf/d above exports in the same period a year ago, according to Platts Analytics.
The North American gas market is transforming as exports to Mexico and LNG shipments are only going to rise, putting additional pressure on the market.
That said, China is threatening to impose a 25% import duty on US LNG, which would be bearish for prices as gas could possibly be stranded in the US if record production levels persist.
Total US demand on Friday -- including exports to Mexico and LNG exports -- is set to fall 800 MMcf to 76.5 Bcf, led primarily by a decline in power burn, according to Platts Analytics.
