NEW YORK: US natural gas futures fell about 3% to a three-week low on Wednesday as the amount of gas flowing to liquefied natural gas (LNG) export plants remained low due to maintenance outages and as European gas prices dropped on hopes Australia will avoid strikes at LNG plants.
Front-month gas futures for September delivery on the New York Mercantile Exchange fell 6.3 cents, or 2.5%, to settle at $2.497 per million British thermal units (mmBtu), their lowest close since Aug. 2.
European gas prices at the Dutch Title Transfer Facility (TTF) benchmark for September plunged about 15% to a one-week low of around $12 per mmBtu on solid European gas inventories, the restart of nuclear power reactors in France and hopes by some that Australia will avoid strikes.
US gas futures fell despite forecasts for hotter weather and higher gas demand over the next two weeks than previously expected as a brutal heat wave moves slowly across the central US
That heat wave is expected to boost power demand to record highs in the 15-state Midcontinent Independent System Operator (MISO) territory from Minnesota to Louisiana on Thursday and the Electric Reliability Council of Texas (ERCOT) grid in Texas on Friday as homes and businesses crank up air conditioners.
In the MISO region, the grid operator projected it may be forced to use some power held in reserve to meet demand plus required reserves at the peak hour on Thursday.
Traders noted that grids usually call for consumers to conserve energy when available supplies don’t meet demand plus reserve requirements.
MISO projected demand would reach a record 128,222 megawatts (MW) on Thursday. To meet that load plus 2,410 MW of required reserves, or 130,632 MW, the grid said it expected to have about 130,267 MW of resources available with 125,130 MW from supplies within MISO and 5,137 MW of imports. MISO’s current all-time high is 127,100 MW set in July 2011.
Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.
Data provider Refinitiv said average gas output in the US Lower 48 states had eased to 101.6 billion cubic feet per day (bcfd) so far in August from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May.
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