US natgas futures flat; summer heat should keep air conditioners cranked

US natural gas futures were little changed on Wednesday on forecasts for the heat wave blanketing much of the country to continue through early August, keeping air-conditioning demand strong.

Front-month gas futures rose 0.6 cents, or 0.4%, to settle at $1.681 per million British thermal units.

Looking ahead, futures for the balance of 2020 were trading 27% over the front month, while futures and calendar 2021 had a premium of 54%, as traders expected energy demand to rise as the economy rebounds from lockdowns during the pandemic.

Data provider Refinitiv projected US demand, including exports, will hold around 92.7 billion cubic feet per day (bcfd) this week and next. The outlook for next week was lower than Refinitiv's forecast on Tuesday.

The power industry consumed more than half of that gas to keep air conditioners humming, gobbling up a one-day record of 47.5 bcfd on Monday.

Pipeline gas flowing to US LNG export plants averaged 3.4 bcfd (35% 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.

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

Refinitiv said pipeline exports to Canada averaged 2.4 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 5.60 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.

Refinitiv said production in the Lower 48 US states averaged 88.3 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.