US natural gas futures steady

NEW YORK: US natural gas futures held steady on Wednesday on little changes in daily output or weather and demand forecasts for the next two weeks.

That price stability came despite near-record gas flows to liquefied natural gas export plants and forecasts that hotter-than-normal weather will 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 fell 0.1 cent, or 0.2%, to $3.004 per million British thermal units at 8:50 a.m. EDT (1250 GMT). In a sign that the market is not worried about having enough gas supplies this winter, the premium of futures for March over April 2026 NGH26-J26, which the industry calls the widow maker, was on track to fall to a record low on Wednesday.

The industry calls the March-April spread the “widow maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.

The industry uses the March-April and October-November spreads to bet on winter weather forecasts and supply and demand since March is the last month of the winter heating season when utilities pull gas out of storage and October is the last month of the summer cooling season when utilities inject gas into storage. Despite a hotter-than-usual summer, record output has allowed energy firms to inject 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.

EIA/GASNGAS/POLL In the Atlantic Ocean, meanwhile, 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 one with a 60% chance of forming in the North Central Atlantic.

LSEG said average gas output in the Lower 48 states eased to 107.8 billion cubic feet per day (bcfd) so far in August, down from a monthly record high of 107.9 bcfd in July.