NEW YORK: US natural gas futures eased about 1% to a one-week low on Tuesday on rising output so far this month and forecasts for lower demand over the next two weeks than previously expected with the heat wave blanketing the eastern half of the country expected to break in a day or two.
Gas futures for July delivery on the New York Mercantile Exchange fell 3.7 cents, or 1.0%, to $3.661 per million British thermal units (mmBtu) at 8:43 a.m. EDT (1243 GMT), putting the contract on track for its lowest close since June 13 for a second day in a row.
One factor that has weighed on gas prices since mid-April was the growing surplus of gas in storage.
Even though the weather was hotter than normal last week, analysts projected energy firms still injected more gas into storage than usual, likely boosting stockpiles to around 6% above the five-year average for this time of year.
The brutal heat this week boosted power prices in some parts of the country to their highest since January as homes and businesses cranked up air conditioners, stressing regional power grids. Next-day power prices in New England jumped about 17% to around $189 per megawatt hour (MWh) for Tuesday, while spot power in the Pennsylvania-New Jersey-Maryland (PJM) region at the PJM West hub held over $200 for a second day in a row.
That compares with an average of $81 per MWh in New England so far this year and $47 in calendar 2024, and an average of $56 in PJM so far this year and $42 in calendar 2024.
The PJM grid actually covers all or parts of 13 states from New Jersey to Illinois.
Financial firm LSEG said average gas output in the Lower 48 US states rose to 105.5 billion cubic feet per day so far in June, up from 105.2 bcfd in May, but still below the monthly record high of 106.3 bcfd in March due primarily to normal spring pipeline maintenance.
On a daily basis, however, output was on track to drop by around 1.8 bcfd to a preliminary two-week low of 104.8 bcfd on Tuesday. Analysts have noted that preliminary data is often revised later in the day.
Meteorologists forecast weather across the Lower 48 states will remain mostly warmer than normal through at least July 9.
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