CHICAGO: US natural gas futures eased on Wednesday on forecasts for less hot weather over the next two weeks than previously expected.
Traders, however, noted that even though the weather would be less hot, temperatures were expected to remain well above normal for this time of year through early September, which should keep air conditioning demand high. Front-month gas futures fell 2.7 cents, or 0.7%, to $3.869 per million British thermal units at 8:33 am EDT (1233 GMT).
In the power market, the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, said peak demand hit its highest so far in 2021 on Tuesday and will likely top that on Wednesday as homes and businesses crank up their air conditioners to escape another heat wave. Those peaks, however, were expected to miss the grid’s all-time high of 74,820 megawatts set in August 2019.
Data provider Refinitiv said gas output in the US Lower 48 states rose to an average of 92.1 billion cubic feet per day (bcfd) so far in August from 91.6 bcfd in July. That compares with an all-time monthly high of 95.4 bcfd in November 2019.
Refinitiv projected average US gas demand, including exports, would hold near 94.0 bcfd this week and next. Those forecasts were higher than Refinitiv projected on Tuesday as lingering heat causes power generators to burn more gas to keep air conditioners humming.
The amount of gas flowing to US LNG export plants slipped from an average of 10.8 bcfd in July to 10.5 bcfd so far in August, due mostly to reductions at the Cameron and Sabine plants in Louisiana and the pipelines that provide them with fuel. That compares with a record 11.5 bcfd in April.
But with European and Asian gas both trading over $15 per mmBtu, compared with just about $4 for the US fuel, analysts said buyers around the world would keep purchasing all the LNG the United States can produce.
US pipeline exports to Mexico 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.