US natgas holds near 7-month peak as LNG exports pick up
- Front-month gas futures settled down 0.2 cents, or 0.1%, at $2.191 per million British thermal units (mmBtu).
- "The global demand is picking up for LNG and the forecasts that temperatures will turn above normal is making the market look tighter, but in the short term.
US natural gas futures settled slightly lower after hitting their highest since December on Wednesday as liquefied natural gas exports climbed while the weather was expected to remain hotter-than-normal through late August.
Front-month gas futures settled down 0.2 cents, or 0.1%, at $2.191 per million British thermal units (mmBtu), having risen to their highest since Dec. 27 at 2.261 mmBtu.
"The global demand is picking up for LNG and the forecasts that temperatures will turn above normal is making the market look tighter, but in the short term, the reason that we're pulling back is because of the power outages along the east coast," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Hurricane Isaias, which hit North Carolina Monday night, briefly broke the heat wave that has blanketed much of the country since late June. The storm knocked out power to more than three million homes and businesses from North Carolina to Maine. Its remnants are over Quebec.
The front-month was still in overbought territory with a Relative Strength Index (RSI) over 70 for a third day in a row for the first time since November 2019.
Traders noted any lingering concerns that prices would fall as US stockpiles fill to maximum levels have gone away now that power generators have burned record amounts of gas to keep air conditioners humming since late June and as LNG companies boost their exports again. Analysts, however, still expect inventories to reach a record 4.1 trillion cubic feet by the end of October.
But with hot weather expected to return, data provider Refinitiv projected US demand, including exports, will rise from an average of 88.6 bcfd this week to 91.0 bcfd next week. That is a little lower than Refinitiv's outlook on Tuesday as higher gas prices cause power generators to burn more coal instead of gas.
US LNG exports are on track to rise for the first time in six months as the amount of pipeline gas flowing to the plants rose to 4.0 bcfd in August from a 21-month low of 3.3 bcfd in July when buyers canceled dozens of cargoes.
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