US natgas jumps 4pc as pipeline exports rise despite less hot weather forecasts

US natural gas futures jumped almost 4% on Tuesday as pipeline exports increase despite forecasts for less hot weather and lower air conditioning demand over the next two weeks than previously expected.

On its second to last day as the front-month, gas futures for August delivery rose 6.6 cents, or 3.8%, to settle at $1.800 per million British thermal units (mmBtu). That erased much of Monday's 4% loss.

September futures, which will soon be the front-month, were up about 7 cents to $1.86 per mmBtu.

Even though the hottest days of summer are likely past, meteorologists project temperatures will remain above-normal in the Lower 48 US states through at least mid August. The weather has already been hotter-than-normal every day since late June.

Refinitiv said US production averaged 88.5 billion cubic feet per day (bcfd) 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 projected US demand, including exports, will slide from 91.0 bcfd this week to 89.9 bcfd next week. That is lower than Refinitiv's outlook on Monday.

Pipeline gas flowing to US LNG export plants averaged 3.3 bcfd (34% 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 neighboring 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 5.62 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.