NEW YORK: US natural gas futures climbed about 2% on Tuesday, lifted by a drop in daily output, rising gas flows to liquefied natural gas (LNG) export plants and forecasts for hotter-than-normal weather to last through late August.
The heat means homes and businesses will likely keep their air conditioners cranked up until the end of the month, forcing power generators to burn more gas than usual for this time of year. More than 40% of the electricity produced in the US comes from gas-fired power plants.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 7.1 cents, or 2.4%, to $3.003 per million British thermal units. On Monday, the contract closed at its lowest price since April 25.
That increase pushed the contract out of technically oversold territory.
Despite a hotter-than-usual summer, record output has allowed energy firms to put more gas into storage than usual in recent months. Analysts said gas stockpiles were currently around 7% above normal for this time of year and would likely keep growing in coming weeks.
In the Atlantic Ocean, the US National Hurricane Center said there were two disturbances that could turn into tropical cyclones over the next week - one with a 40% chance of forming off the coasts of North and South Carolina and Georgia, and one with a 50% chance of forming in the North Central Atlantic.
LSEG said average gas output in the Lower 48 states rose to 108.0 billion cubic feet per day (bcfd) so far in August, up from a monthly record high of 107.9 bcfd in July.
But on a daily basis, output was on track to drop to a preliminary three-week low of 106.0 bcfd on Tuesday, down about 3.7 bcfd since hitting a daily record high of 109.7 bcfd on July 28. Preliminary data, however, is often revised later in the day.
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