NEW YORK: US natural gas futures edged up to a two-week high on Wednesday on a daily rise in liquefied natural gas (LNG) export plants and forecasts for hotter weather and higher demand over the next two weeks than previously expected.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 3.0 cents, or 1.1 percent, to USD2.797 per million British thermal units (mmBtu), putting the contract on track for its highest close since July 24.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 111.1 billion cubic feet per day (bcfd) so far in August, up from a monthly record high of 110.7 bcfd in July.
Record output and mild spring weather so far this year have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
Analysts said the amount of gas in storage would likely ease to a still high 6.6 percent above normal during the week ended August 7, down from 6.7 percent above normal in the previous week, according to estimates ahead of the weekly federal inventory report on Thursday.
Gas inventories have remained in surplus despite weeks of above-normal temperatures so far this summer.
Meteorologists forecast the weather would remain mostly warmer than normal through August 27, forcing power generators to continue burning significant volumes of gas to keep air conditioners running. About 40 percent of US power generation comes from gas-fired plants.
LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 115.0 bcfd this week to 112.2 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.
In other news, over 729,000 homes and businesses were without power on Wednesday as severe storms battered the US Midwest, according to data from PowerOutage.us.
Depending on the length of those outages, the amount of gas burned to produce electricity could decline a bit this week.
Average gas flows to the nine big US LNG export plants eased to 17.1 bcfd so far in August, down from 17.2 bcfd in July and a monthly record high of 17.4 bcfd in June.
On a daily basis, however, LNG feedgas was on track to rise to 17.4 bcfd on Wednesday, up from 16.4 bcfd on Tuesday and in line with an average of 17.4 bcfd over the prior seven days.
The US became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost US gas.
Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Around the world, gas was trading around USD21 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan-Korea Marker (JKM) benchmark in Asia.
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