NEW YORK: US natural gas futures edged up about 1% to a one-week high on Thursday on a smaller-than-expected storage build last week when extreme heat boosted the amount of gas power generators burned to keep air conditioners humming.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 2.6 cents, or 0.8%, to $3.103 per million British thermal units at 11:07 a.m. EDT (1507 GMT), putting the contract on track for its highest close since July 31. In addition to the small storage build, prices were also supported by near-record gas flows to liquefied natural gas export plants and forecasts for hotter-than-normal weather to continue through at least 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 keep burning 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.
The US Energy Information Administration said energy firms added 7 billion cubic feet of gas into storage during the week ended August 1.
That was smaller than the 17-bcf build analysts forecast in a Reuters poll and compared with an increase of 21 bcf during the same week last year and an average of 29 bcf over the 2020-2024 period.
That build left gas stockpiles about 6% above the five-year normal for this time of year.
In the Atlantic Ocean, the US National Hurricane Center said two disturbances could turn into tropical cyclones over the next week - one with a 30% chance of forming and another with a 60% chance. It is likely, however, that neither storm will reach land in the US
LSEG said average gas output in the Lower 48 states eased to 107.8 billion cubic feet per day so far in August, down from a monthly record high of 107.9 bcfd in July.
LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 105.8 bcfd this week to 109.6 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.
The average amount of gas flowing to the eight big US LNG export plants rose to 16.1 bcfd so far in August, up from 15.5 bcfd in July. That compares with a monthly record high of 16.0 bcfd in April.
On a daily basis, LNG export feedgas was on track to ease to 16.1 bcfd on Thursday, having reached a 16-week high of 16.8 bcfd on Wednesday after Freeport LNG’s 2.1-bcfd export plant in Texas exited last week’s outages and Venture Global LNG’s Plaquemines plant in Louisiana pulled in a near-record 3.2 bcfd.
That compares with a total daily LNG feedgas record high of 17.3 bcfd on April 9.
The LNG export gas flow reduction on Thursday was due to small declines at several plants including at Cheniere Energy’s 3.9-bcfd Corpus Christi plant in Texas, to around 1.7 bcfd on Thursday from a three-week high of 2.4 bcfd on Wednesday, according to LSEG data.