NEW YORK: US natural gas futures on Tuesday rose close to their highest since December on a reduction in output, forecasts for hot weather through late August and an increase in liquefied natural gas exports.
Front-month gas futures rose 1.8 cents, up 0.8%, to settle at $2.171 per million British thermal units, putting the contract within a nickel of its highest close since Dec. 26.
Looking ahead, futures for the balance of 2020 and calendar 2021 traded over the front-month by 18% and 27%, respectively, on hopes energy demand will rise as the economy rebounds from coronavirus lockdowns.
US output for Tuesday was on track to fall 2.5 billion cubic feet per day, the most in a day since May, to 87.2 bcfd, according to preliminary data from Refinitiv that is subject to change. Traders noted much of that production loss was in West Virginia due to maintenance this week on TC Energy Corp's Mountaineer Xpress pipeline.
Although US and European gas contracts mostly trade on their own fundamentals, a 47% jump in prices at the European Title Transfer Facility (TTF) benchmark in the Netherlands so far in August helped drag US gas up about 22% this month. That made it profitable for more US LNG cargoes to go to Europe again for the first time in months.
US LNG exports in August were on track to rise for the first time in six months. Pipeline gas flowing to the plants climbed to 4.2 bcfd in August from a 21-month low of 3.3 bcfd in July, when buyers canceled dozens of cargoes.-Reuters
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