U.S. natural gas futures held near a 12-week high on Sept. 24 as some Gulf Coast oil and gas producers cut output ahead of a possible hurricane that could pass through the Gulf of Mexico later this week, offsetting forecasts for lower demand over the next two weeks than previously expected.

Front-month gas futures for October delivery on the New York Mercantile Exchange were down 0.7 cents, or 0.3%, to $2.606/MMBtu at 9 a.m. EDT. On Sept. 23, the contract closed at its highest level since June 27.

That kept the front-month in technically overbought territory for a second day in a row for the first time since late May.

With front-month gas prices up about 28% over the past five weeks, the premium of futures for November over October fell to just 22 cents/MMBtu, the lowest since September 2022. October is the current front-month.

Analysts have said gas prices should trade at lower levels during the April-October summer cooling season than the November-March winter heating season since U.S. demand for gas peaks during the winter.

In the Atlantic basin, the U.S. National Hurricane Center (NHC) forecast a tropical disturbance in the Caribbean Sea would strengthen into a hurricane on Sept. 25 that would hit the Florida Panhandle late on Sept. 26.

Although storms are more likely to reduce gas demand and prices through power outages and shutting of LNG export plants, analysts said this storm was on track to miss the LNG plants.

That means demand for gas from those LNG export plants was likely to remain high at the same time that some Gulf Coast producers cut output.

More than 75% of U.S. gas production still comes from big inland shale basins like Appalachia in Pennsylvania, West Virginia and Ohio and the Permian in West Texas and eastern New Mexico, so most of the country's gas output should remain safe from the storm.

Supply and demand

LSEG said gas output in the Lower 48 U.S. states has slid to an average of 102.0 Bcf/d so far in September, down from 103.2 Bcf/d in August.

But on a daily basis, output was on track to drop by around 3.2 bcfd over the past four days to a preliminary four-month low of 99.6 bcfd. Analysts, however, noted that preliminary data was often revised later in the day.

With milder autumn weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will slide from 98.5 Bcf/d this week to 96.4 Bcf/d next week. Those forecasts were lower than LSEG's outlook on Sept. 23.

Gas flows to the seven big U.S. LNG export plants have eased to an average of 12.8 Bcf/d so far in September, down from 12.9 Bcf/d in August. That compares with a monthly record high of 14.7 Bcf/d in December 2023.

That reduction was due mostly to the planned Sept. 20 shutdown of Berkshire Hathaway Energy's 0.8-Bcf/d Cove Point LNG export plant in Maryland for around three weeks of annual maintenance.

In other LNG news, a tanker docked for the past month at Venture Global LNG's Plaquemines export plant under construction in Louisiana left by Tuesday morning, according to data provider LSEG.

Energy analysts said that was likely a sign Plaquemines was getting closer to producing and exporting its own LNG.

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