NEW YORK: US natural gas futures fell 2percent to a one-week low on Friday on forecasts for slightly less demand next week than previously expected following heat waves this week in California and Texas that boosted local gas use and prices.
So far this week, Texas and California have passed the major heat wave test that stressed their electric systems with record demand, lots of forced generation outages in Texas and scorching weather across the West that reduced power imports into California.
Traders noted that gas futures declined even though demand is expected to climb in two weeks when heat returns and power generators burn more gas again to keep air conditioners humming and the amount of gas flowing to liquefied natural gas (LNG) export plants rises as units exit maintenance outages.
Front-month gas futures fell 6.8 cents, or 2.1percent, to $3.185 per million British thermal units (mmBtu) at 9:19 a.m. EDT (1319 GMT), putting the contract on track for its lowest close since June 10.
For the week, the front-month was down about 3percent after gaining over 13percent during the prior three weeks.
Data provider Refinitiv said gas output in the Lower 48 US states averaged 91.6 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 recorded in November 2019.
Refinitiv projected average gas demand, including exports, would slip to 87.6 bcfd next week from 89.4 bcfd this week after the brutal heat wave in the Southwest and Texas, before rising to 92.3 bcfd in two weeks as the weather turns seasonally hotter for the summer.
The amount of gas flowing to US LNG export plants slid to an average of 9.7 bcfd so far in June, down from 10.8 bcfd in May and an all-time high of 11.5 bcfd in April.
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