CHICAGO: US natural gas futures rebounded from a three-week low on Monday as forecasts projected hotter weather than previously expected, which could increase demand for the fuel to cool homes and businesses.
Front-month gas futures jumped 10.9 cents, or 2.9%, to $3.971 per million British thermal units (mmBtu) by 10:02 a.m. EDT (1402 GMT), recovering from its lowest level since July 20 earlier in the session.
Refinitiv projected average US gas demand, including exports, would rise from 92.2 bcfd this week to 93.6 bcfd next week.
“What’s really putting price upward pressure on prices is strong LNG exports and lower production,” said Kent Bayazitoglu, consultant at Baker & O’Brien, adding that hotter weather was also likely to put pressure on storage in the shorter term.
Data provider Refinitiv said gas output in the US Lower 48 states has risen to an average of about 92 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.
The amount of gas flowing to US LNG export plants is expected to jump to a four-week high of 10.9 bcfd in the next two weeks as several Gulf Coast plants, including Cameron and Sabine in Louisiana and Freeport in Texas, have returned nearly to full service.
With European and Asian gas both trading over $16 per mmBtu, compared with around $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 at a record high.
In the Atlantic basin, Tropical Storm Fred is expected to make landfall in the Florida Panhandle by Monday. Traders noted Fred would likely result in cooler weather and power outages that would reduce gas demand but not affect output much since Florida produces almost no gas.
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