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NEW YORK: US natural gas futures fell about 3% on Friday with an increase in output so far this month and as the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas leaves more fuel in the United States for utilities to refill low storage.

That decline came despite a drop in output this week and forecasts for hotter weather and more demand over the next two weeks than previously expected.

Extreme heat has already boosted power demand to record highs as homes and businesses crank up their air conditioners across the country, including Texas, where conservation efforts saved the state’s grid operator from taking major emergency steps like rotating blackouts to avoid widespread outages.

Freeport, the second-biggest US LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Freeport LNG has said the facility could return by October. Some analysts, however, said the outage could last longer.

Front-month gas futures fell 16.7 cents, or 2.5%, to $6.433 per million British thermal units (mmBtu) at 7:58 a.m. EDT (1158 GMT).

For the week, the contract was up for about 7% after rising about 5% last week.

So far this year, the front-month was up about 73% as much higher prices in Europe and Asia keep demand for US LNG exports strong, especially since Russia’s invasion of Ukraine stoked fears Moscow would cut gas supplies to Europe.

Gas was trading around $49 per mmBtu in Europe, which is a four-month high, and $39 in Asia .

After the shutdown of Nord Stream 1 for maintenance on July 11, Russian gas exports on the three main lines into Germany - Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route - have held around 1.4 bcfd.

That is down from an average of 3.7 bcfd in the month before Nord Stream shut and an average of 9.4 bcfd in July 2021.

The companies operating Nord Stream said the pipe should return around July 21. Analysts, however, said the outage could last longer.

US futures lag far behind global prices because the United States is the world’s top producer, with all the gas it needs for domestic use, while capacity constraints limit LNG exports.

Data provider Refinitiv said average gas output in the US Lower 48 states rose to 96.0 bcfd so far in July from 95.3 bcfd in June. That compares with a monthly record high of 96.1 bcfd in December 2021.

On a daily basis, however, output was on track to drop by 1.5 bcfd this week to a preliminary 94.7 bcfd on Friday. Preliminary data is often revised later in the day.

With hotter weather coming, Refinitiv projected average US gas demand including exports would rise to around 100.2 bcfd over the next two weeks from 99.2 bcfd this week. The forecast for this week and next were slightly higher than Refinitiv’s outlook on Thursday.

The average amount of gas flowing to US LNG export plants held at 11.2 bcfd so far in July, the same as June. That was down from 12.5 bcfd in May and a monthly record of 12.9 bcfd in March due to the Freeport outage.

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