NEW YORK: US natural gas futures slid about 3% to a one-week low on Tuesday on near-record output and forecasts for less hot weather over the next two weeks than previously expected.
Energy traders said prices were also weighed down by stagnant gas flows to liquefied natural gas export plants and ample amounts of gas in storage.
Front-month gas futures for August delivery on the New York Mercantile Exchange fell 9.7 cents, or 2.9%, to $3.228 per million British thermal units, putting the contract on track for its lowest close since July 9.
Despite hotter than normal weather so far this summer, analysts projected record output should allow energy firms to keep injecting more gas into storage than usual in coming weeks. Gas stockpiles were already about 6% above normal levels for this time of year.
LSEG said average gas output in the Lower 48 rose to 107.2 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.
On a daily basis, however, output was on track to drop by around 2.4 bcfd to a preliminary one-week low of 106.1 bcfd on Tuesday since hitting a daily record of 108.4 bcfd on July 18. Analysts have noted that preliminary data is often revised later in the day.
Meteorologists forecast the weather in the Lower 48 US states would remain mostly hotter than normal through at least August 6 - though less hot than previously forecast - with the hottest days of the summer expected early next week.
Temperatures across the country will average around 81 degrees Fahrenheit (27.2 degrees Celsius) on July 28 and 82 F on July 29. That would exceed the summer’s current hottest daily average of 80 F on June 24 but would remain below the daily average record high of 83 F on July 20, 2022, according to data from financial firm LSEG going back to 2018.
LSEG forecast average gas demand in the Lower 48, including exports, would rise from 105.8 bcfd this week to 110.0 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
The average amount of gas flowing to the eight big US LNG export plants rose to 15.8 bcfd so far in July as liquefaction units at some plants slowly exited maintenance reductions and unexpected outages. That was up from 14.3 bcfd in June and 15.0 bcfd in May, but remained below the monthly record high of 16.0 bcfd in April.
Comments
Comments are closed for this article.