US natgas slips on less hot weather despite record Mexico pipe exports

US natural gas futures slipped over 1% on Friday on forecasts for less hot weather over the next two weeks than previously expected.

That decline comes even though pipeline exports to Mexico are on track to hit a record monthly high.

Front-month gas futures fell 2.5 cents, or 1.5%, to $1.698 per million British thermal units at 8:02 a.m. EDT (1202 GMT).

For the week, the front-month was on track to drop about 6% after rising almost 21% in the prior two weeks.

Refinitiv said production in the Lower 48 US states averaged 88.2 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November.

As consumers crank up their air conditioners, Refinitiv forecast US demand, including exports, will rise from 90.8 bcfd this week to 93.0 bcfd next week and 93.3 bcfd in two weeks. That, however, was lower than Refinitiv's outlook on Thursday.

Pipeline gas flowing to US LNG export plants averaged 3.3 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport in Texas remained at zero for an 11th day in a row.

US pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners.

Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.56 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.