US natgas futures slide on rising output, less hot weather

US natural gas futures slipped on Monday on slowly rising output and forecasts for less hot weather and lower air conditioning demand over the next two weeks than previously expected.

Traders noted that price decline came despite a drop in liquefied natural gas (LNG) exports this month to their lowest since early 2018 due to global coronavirus demand destruction.

Front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 2.7 cents, or 1.5%, to $1.778 per million British thermal units at 8:42 a.m. EDT (1242 GMT).

Looking ahead, speculators boosted their long positions on the NYMEX last week to their highest since December 2018 on hopes energy demand will rise as the economy rebounds after state governments lift coronavirus-linked lockdowns.

Refinitiv said production in the Lower 48 US states averaged 88.1 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. Traders noted production rose over the weekend after TC Energy Corp's Mountaineer Xpress pipeline in West Virginia returned to service following unplanned work.

Refinitiv forecast US demand, including exports, will rise from 90.4 bcfd this week to 92.2 bcfd next week. That, however, was lower than Refinitiv's outlook on Friday.

Pipeline gas flowing to US LNG export plants averaged just 3.2 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport in Texas held at zero for a seventh day for the first time since July 2019 when the first of its three liquefaction trains was in test mode.