NEW YORK: US natural gas futures eased on Thursday from a 31-month high in the prior session after forecasts for milder hot weather over the next two weeks offset a smaller than expected weekly storage build.
The US Energy Information Administration (EIA) said utilities added 13 billion cubic feet (bcf) of gas into storage during the week ended July 30.
That was less than the 21-bcf build analysts forecast in a Reuters poll and compares with an increase of 32 bcf in the same week last year and a five-year (2016-2020) average increase of 30 bcf.
Last week’s injection boosted stockpiles to 2.727 trillion cubic feet (tcf), or 6.4% below the five-year average of 2.912 tcf for this time of year.
Front-month gas futures fell 1.8 cents, or 0.4%, to settle at $4.140 per million British thermal units (mmBtu). In the power market, the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, projected hot weather next week would boost peak demand over 74,000 megawatts (MW) on Aug. 9-11. That would top the current high for the year of 72,856 MW set on July 26 but fall short of the grid’s all-time high of 74,820 MW in August 2019.
Data provider Refinitiv said gas output in the US Lower 48 states rose to 91.7 billion cubic feet per day (bcfd) so far in August from 91.6 bcfd in July. That was still well below the all-time high of 95.4 bcfd in November 2019.
Refinitiv projected average gas demand, including exports, would rise from 90.9 bcfd this week to 94.3 bcfd next week as power generators burn more fuel to meet rising air conditioning use. The forecast for next week, however, was a little lower than Refinitiv predicted on Wednesday on less hot weather.
The amount of gas flowing to US liquefied natural gas (LNG) export plants slipped from an average of 10.8 bcfd in July to 10.4 bcfd so far in August due mostly to a reduction at Cameron LNG in Louisiana. That compares with a record 11.5 bcfd in April.
With European and Asian gas trading over $14 and $15 per mmBtu, respectively, analysts said buyers around the world will keep purchasing all the LNG the United States can produce since the US fuel was selling for around $4. Earlier this week, prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, rose to their highest since hitting a record $14.94 in September 2008.
US pipeline exports to Mexico fell from an average of 6.5 bcfd in July to 6.0 bcfd so far in August. That compares with a record 6.7 bcfd in June.