US Gas Prices Steady as LNG Flows Offset Record Output

Front-month natural gas futures for October delivery on the New York Mercantile Exchange closed at $2.912 per million British thermal units, marking a 0.4% increase. The contract gained 3% for the week, reversing a 5% decline from the previous period. This stability reflects a precise balance between rising domestic production and sustained export demand.

According to LSEG, average gas output in the US Lower 48 states reached 113.2 billion cubic feet per day in early September, exceeding the August record of 112.2 bcfd. Despite this supply increase, prices have not fallen sharply because LNG export volumes have absorbed the additional flow. The market remains in a state of equilibrium rather than surplus.

Inventory Surplus Narrows Amid Heat

Mild spring weather previously allowed inventory levels to reach 7.7% above the five-year average in April. However, hotter-than-normal summer conditions forced utilities to draw down storage to meet peak electricity demand. Since approximately 40% of US power generation relies on gas-fired plants, this seasonal shift has significantly reduced the buffer available in storage facilities.

Estimates suggest the inventory surplus dropped to 3% above normal during the week ended September 18, down from 3.7% the prior week. Meteorologists forecast that temperatures will remain warmer than average through October 3, which will likely continue to pressure storage levels. This trend limits the ability of the market to absorb further production increases without price support.

LNG Exports Counterbalance Domestic Supply

Average gas flows to nine major US LNG export plants rose to 18.1 bcfd in September, up from 17.2 bcfd in August. This increase in export activity directly offsets the rise in domestic production. On a daily basis, feedgas volumes were on track to hit 18.2 bcfd, driven by higher throughput at Sempra’s Cameron LNG facility in Louisiana.

Future export volumes may face temporary constraints as Berkshire Hathaway Energy prepares for maintenance at its Cove Point facility. The plant, which handles 0.8 bcfd, is expected to enter a multi-week maintenance window soon. This planned downtime will reduce total export capacity in the short term, potentially altering the supply-demand dynamics in the coming weeks.

Global Benchmarks Remain Elevated

International gas prices are trading near 44-month highs, with the Dutch Title Transfer Facility benchmark reaching approximately $27 per mmBtu. The Japan-Korea Marker benchmark shows a similar level of strength. These high global prices provide a strong economic incentive for US exporters to maintain high flow rates, ensuring that domestic supply is efficiently allocated to the highest-value markets.

The divergence between the relatively low US domestic price and the high international benchmark creates a persistent arbitrage opportunity. This structure supports continued investment in LNG infrastructure and ensures that US producers remain competitive on the global stage. The current pricing environment reflects a tight global market where US exports play a critical role in satisfying demand.