NEW YORK: US natural gas futures edged up about 1% on Friday on forecasts for hot weather to continue into next week, forcing power generators to keep burning lots of gas to produce electricity for air conditioning.
This week, that heat wave boosted power prices in Texas to a 30-month high and the state’s grid operator, the Electric Reliability Council of Texas (ERCOT), called on consumers to conserve energy for a second day in a row on Friday due to tight electric supplies.
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.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 2.1 cents, or 0.8%, to settle at $2.540 per million British thermal units (mmBtu).
For the week, the contract declined less than 1% after falling about 8% last week. The US National Hurricane Center (NHC), meanwhile, forecast a tropical cyclone could form in the Caribbean Sea or Gulf of Mexico over the next week.
Data provider Refinitiv said average gas output in the lower 48 US states has eased to 101.6 billion cubic feet per day (bcfd) so far in August, down from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May.
Despite a seasonal cooling, meteorologists forecast the weather in the lower 48 US states will remain mostly hotter than normal through at least Sept. 9.
Refinitiv forecast US gas demand, including exports, would rise from 103.9 bcfd this week to 104.3 bcfd next week before dropping to 102.6 bcfd as the weather turns seasonally cooler. The forecast for next week was higher than Refinitiv’s outlook on Thursday, due to an expected increase in the amount of gas flowing to liquefied natural gas (LNG) export plants.
Gas flows to the seven big US LNG export plants, meanwhile, fell from an average of 12.7 bcfd in July to 12.2 bcfd so far in August due mostly to reductions at Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas. That compares with a monthly record of 14.0 bcfd in April.
Cheniere’s Corpus LNG export plant was on track to pull in about 2.2 bcfd of feedgas on Friday, up from around 1.6 bcfd on Wednesday and Thursday after Tropical Storm Harold passed close to the plant on Tuesday.
On Thursday, US natural gas futures edged up about 1% on a much smaller-than-expected storage build last week when power generators burned lots of gas to keep air conditioners humming during an extreme heat wave.
The US Energy Information Administration (EIA) said utilities added just 18 billion cubic feet (bcf) of gas into storage during the week ended Aug 18.
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