US natgas futures climb to fresh 10-week high on cooler forecast

US natural gas futures rose to a fresh 10-week high on Tuesday on forecasts for cooler weather and higher heating demand next week than previously expected and continued near record exports.

Front-month gas futures rose 2.8 cents, or 0.9%, to $2.994 per million British thermal units at 8:50 a.m. EDT (1250 GMT), putting the contract on track for its highest close since Feb. 19 for a second day in a row.

That kept the front-month in overbought territory with a Relative Strength Index (RSI) over 70 for a seventh straight day for the first time since November 2019.

Data provider Refinitiv said gas output in the Lower 48 US states averaged 90.8 billion cubic feet per day (bcfd) so far in May, up from 90.6 in April but still well below November 2019's monthly record of 95.4 bcfd.

Refinitiv projected average gas demand, including exports, would rise from 86.0 bcfd this week to 86.5 bcfd next week as the weather turns cooler. The forecast for next week was higher than Refinitiv estimated on Monday.

The amount of gas flowing to US LNG export plants averaged 11.1 bcfd so far in May, down from April's monthly record of 11.5 bcfd.

Buyers around the world continue to purchase near-record amounts of US gas because prices in Europe and Asia remain high enough to cover the cost of buying and transporting the US fuel across the ocean.

Traders, however, said US LNG exports cannot rise much more until new units enter service in late 2021/early 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants pull in a little more gas than they export because some of the fuel is used to run the facility.

US pipeline exports to Mexico averaged 5.6 bcfd so far in May, down from April's monthly record of 6.1 bcfd, according to Refinitiv.