NEW YORK: US natural gas futures held near a one-week low on Tuesday as weaker US demand forecasts offset the bullish impact of near record power demand in Texas and all-time high gas prices in Europe.
Front-month gas futures remained unchanged at $4.063 per million British thermal units (mmBtu) at 8:38 a.m. EDT (1238 GMT). On Monday, the contract closed at its lowest since Aug. 3.
In the power market, the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, projected hot weather on Tuesday and Wednesday would push peak demand over the current high for the year of 72,856 megawatts (MW) set on July 26. ERCOT also forecast next week's heat would boost power use over the all-time high of 74,820 MW set in August 2019.
Data provider Refinitiv said gas output in the US Lower 48 states rose to an average of 92.0 billion cubic feet per day (bcfd) so far in August from 91.6 bcfd in July. That compares with an all-time high of 95.4 bcfd in November 2019.
With hot weather expected to linger through late August, Refinitiv last week projected average US gas demand, including exports, would rise from 92.4 bcfd this week to 94.0 bcfd next week as power generators burn more fuel to meet rising air conditioning use. Those forecasts, however, were lower than Refinitiv projected on Monday.
The amount of gas flowing to US liquefied natural gas (LNG) export plants slipped to an average of 10.2 bcfd so far in August due mostly to reductions at the Cameron and Sabine plants in Louisiana, down from 10.8 bcfd in July and a record 11.5 bcfd in April.
But with European and Asian gas both trading over $15 per mmBtu, versus just $4 for the US fuel, analysts said buyers around the world will keep purchasing all the LNG the United States can produce. Prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, were on track to hit a record high on Tuesday.
US pipeline exports to Mexico have slipped to an average of 6.2 bcfd so far in August from 6.6 bcfd in July and a record 6.7 bcfd in June.
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