NEW YORK: US natural gas futures eased on Wednesday on forecasts for less hot weather and lower air conditioning demand next week than previously expected.
That small price decline came even though gas prices in Europe rose to record highs for a second day in a row and as US homes and businesses in Texas and the Pacific Northwest cranked up their air conditioners this week to escape another round of brutal heat waves.
Front-month gas futures fell 2.6 cents, or 0.6%, to $4.063 per million British thermal units (mmBtu) at 8:02 a.m. EDT (1202 GMT).
In the power market, the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, projected hot weather Wednesday would push peak demand over the current high for the year of 72,856 megawatts (MW) set on July 26. That, however, is below the grid’s all-time high of 74,820 MW set in August 2019.
In the Pacific Northwest, power prices for Wednesday at the Mid Columbia hub in Washington State jumped to $174 per megawatt hour, their highest since averaging $583 in late July. High temperatures in Portland, Oregon were expected to top 100 degrees Fahrenheit (38 Celsius) on Thursday and Friday. The city’s normal high is 80 F at this time of year.
In the Gulf of Mexico, meanwhile, Tropical Storm Fred was expected to reach the South Florida area on Saturday.
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 through late August, Refinitiv projected average US gas demand, including exports, would hold around 92.9 bcfd this week and next as power generators keep burning lots of gas to produce electricity to keep air conditioners humming. The outlook for next week, however, was lower than Refinitiv projected on Tuesday due to less hot forecasts.
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, compared with just $4 for the US fuel, analysts said buyers around the world would 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 for a second day in a row on Wednesday.
US pipeline exports to Mexico have slipped to an average of 6.2 bcfd so far in August from 6.5 bcfd in July and a record 6.7 bcfd in June.
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