NEW YORK: US natural gas futures fell almost 3percent to their lowest in a week on Friday on forecasts for less hot weather over the next two weeks and lower air conditioning demand than previously expected.
Front-month gas futures fell 11.5 cents, or 2.8percent, to $3.944 per million British thermal units (mmBtu) at 8:56 a.m. EDT (1256 GMT), putting the contract on track for its lowest close since July 20.
After closing at its highest since December 2018 on Monday, the front-month contract was on track to fall about 3percent this week. It rose almost 11percent last week.
For the month, the contract was on track to rise about 8percent, putting it up for a fourth month in a row for the first time since November 2018.
In the power market, prices at the Mid Columbia hub in Washington State soared to $583 per megawatt hour (MWh), their highest since hitting a record $891 in March 2019. That price spike came as US West Coast homes and businesses cranked up their air conditioners to escape another brutal heat wave, which earlier this week prompted the California electric grid operator to urge people to conserve energy.
In Texas, the power grid operator forecast demand on Friday would reach its highest so far this year after a heat wave blanketed the state all week.
Data provider Refinitiv said gas output in the US Lower 48 states slipped to 91.6 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia early in the month. That was lower than June’s 92.2-bcfd average and the all-time high of 95.4 bcfd in November 2019.
Refinitiv projected average gas demand, including exports, would drop from 95.7 bcfd this week to 91.5 next week as the weather turns milder before rising to 93.9 bcfd in two weeks when temperatures were expected to rise again. The forecast for next week was lower than Refinitiv predicted on Thursday.
The amount of gas flowing to US LNG export plants has averaged 10.8 bcfd so far in July, up from 10.1 bcfd in June but still below April’s 11.5-bcfd record.
With European and Asian gas trading near $14 and $15 per mmBtu, respectively, analysts said buyers around the world would keep purchasing all the LNG the United States can produce since the US fuel is selling for only $4. Prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, rose to their highest since October 2008 earlier this week. US pipeline exports to Mexico have averaged 6.6 bcfd so far in July, down from a record 6.8 bcfd in June.