NEW YORK: US natural gas futures held near a two-week high on Tuesday as bullish forecasts for hot weather through late August offset a bearish decline in liquefied natural gas export flows, near-record output, and forecasts for weaker demand over the next two weeks than previously expected.
Front-month gas futures for September delivery on the New York Mercantile Exchange fell 0.1 cent to USD2.793 per million British thermal units (mmBtu). On Monday, the contract closed at its highest price since July 24.
Financial firm LSEG said average gas output in the US Lower 48 states has risen to 111.1 billion cubic feet per day so far in August, up from a monthly record high of 110.7 bcfd in July.
Record output and mild spring weather so far this year have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
Analysts said the amount of gas in storage would likely ease to 6.6percent above normal during the week ended August 7, down from 6.7percent above normal in the previous week, according to estimates ahead of the weekly federal inventory report on Thursday.
Gas inventories have remained in surplus despite weeks of above-normal temperatures so far this summer.
Meteorologists forecast the weather would remain mostly warmer than normal through August 26, forcing power generators to continue burning significant volumes of gas to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants. LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 114.2 bcfd this week to 110.5 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
LNG EXPORTS
Average gas flows to the nine big US LNG export plants have eased to 17.1 bcfd so far in August, down from 17.2 bcfd in July and a monthly record high of 17.4 bcfd in June.
The US became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost US gas. Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Around the world, gas was trading around USD20 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and USD21 at the Japan-Korea Marker (JKM) benchmark in Asia.