NEW YORK: US natural gas futures fell to a one-week low on Wednesday on forecasts for less hot weather and lower air conditioning demand next week than previously expected. On its last day as the front month, gas futures for August delivery were down 3.3 cents, or 0.8%, to $3.938 per million British thermal units (mmBtu) at 7:42 a.m. EDT (1142 GMT), putting the contract on track for its lowest close since July 20.
The September contract, which will soon be the front month, was down 4 cents to around $3.90 per mmBtu.
In the power market, next-day prices for Wednesday soared into the triple digits at several Western hubs, including the Mid Columbia in Washington State and Palo Verde in Arizona, as a heatwave settled over the region. The California ISO, the grid operator for most of California, issued a Flex Alert urging consumers to conserve electricity Wednesday evening as the sun goes down and solar stops working but air conditioning demand remains high. In Texas meanwhile the Electric Reliability Council of Texas (ERCOT), the grid operator for most of the state, said peak demand hit the highest this year on Monday and would likely do so again over the next week as homes and businesses crank up air conditioners to escape the latest heatwave.
Data provider Refinitiv said gas output in the US Lower 48 states had slipped to 91.5 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia early in the month. That compares with an average of 92.2 bcfd in June and an all-time high of 95.4 bcfd in November 2019.
Refinitiv projected average gas demand, including exports, would drop from 95.6 bcfd this week to 91.5 next week on expectations for less heat and air conditioning demand. The forecast for next week was lower than Refinitiv's projections on Tuesday. The amount of gas flowing to US liquefied natural gas (LNG) export plants has averaged 10.8 bcfd so far in July, up from 10.1 bcfd in June but still below April's 11.5-bcfd record.
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