US natgas futures flat as rising output offsets higher cooling demand

US natural gas futures were little changed on Wednesday as slowly rising output and declining liquefied natural gas exports offset an increase in pipeline exports and a forecast rise in air conditioning demand over the next two weeks.

Front-month gas futures remained unchanged at $1.743 per million British thermal units at 8:07 a.m. EDT (1207 GMT).

Looking ahead, futures for the balance of 2020 and calendar 2021 were trading 26% and 51%, respectively, over the front-month, on hopes energy demand will rise as the economy rebounds as 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.

Refinitiv forecast US demand, including exports, will rise from 90.8 bcfd this week to 93.6 bcfd next week. That was higher than Refinitiv's outlook on Tuesday.

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

US pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners.

Refinitiv said pipeline exports to Canada averaged 2.5 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.5 bcfd this month, up from 5.4 bcfd in June, but below the record 5.6 bcfd in March.