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NEW YORK: US natural gas futures held near a two-week high on Wednesday on expectations a rise in gas prices earlier this week could prompt power generators to burn more coal and less gas, even though the weather was forecast to be warmer than previously expected over the next two weeks.

Front-month gas futures rose 0.6 cents, or 0.2%, to $3.110 per million British thermal units by 9:34 a.m. EDT (1334 GMT), putting the contract on track for its highest close since May 17 for a second day in a row.

In the power market, meanwhile, extreme heat in Northern California and other parts of the West boosted next-day prices for Wednesday to over $100 per megawatt hour at some hubs like the Mid-Columbia (Mid C) in the US Pacific Northwest.

That was the highest Mid C price since the February freeze when power and gas prices soared to record highs in Texas and several other states.

Data provider Refinitiv said gas output in the Lower 48 US states averaged 91.1 billion cubic feet per day (bcfd) so far in June, up from 91.0 bcfd in May but still well below the monthly record high of 95.4 bcfd in November 2019.

With warmer weather coming, Refinitiv projected average gas demand, including exports, would rise from 84.3 bcfd this week to 89.3 bcfd next week. But those forecasts were lower than Refinitiv predicted on Tuesday, as higher gas prices prompt power generators to burn more coal and less gas to keep air conditioners humming.

The amount of gas flowing to US liquefied natural gas (LNG) export plants averaged 11.0 bcfd so far in June, up from 10.8 bcfd in May but below April’s all-time high of 11.5 bcfd.

With European gas prices near their highest since September 2018 and Asian prices over $10 per mmBtu, analysts said buyers around the world will keep purchasing all the LNG the United States can provide.

US pipeline exports to Mexico averaged 6.62 bcfd so far in June, which would top May’s average of 6.11 bcfd and the all-time high of 6.14 bcfd in April, according to Refinitiv data.

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