NEW YORK: US natural gas futures edged up to a seven-week high on Wednesday on forecasts for more demand over the next two weeks than previously expected with the weather projected to remain hotter than normal through at least mid-September.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 3.5 cents, or 1.2 percent, to USD2.939 per million British thermal units (mmBtu), putting the contract on track for its highest close since July 9.
That price increase came despite a slight reduction in gas flows to some LNG plants along the Gulf Coast, including Cheniere Energy’s Sabine Pass in Louisiana, after Tropical Storm Edouard crossed over the area on Tuesday. Edouard is now a tropical depression dropping lots of rain north of Houston.
Tropical storms can reduce gas demand by cooling the weather and cutting air conditioning use, knocking out power to homes and businesses and disrupting operations at LNG export plants and other industrial facilities.
There are currently about 74,000 homes and businesses without power in Texas, according to power outage tracking firm PowerOutage.us.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 112.2 billion cubic feet per day (bcfd) so far in September, up from a monthly high of 111.5 bcfd in August.
Record output and mild spring weather this year allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
But with hot weather last week, analysts said the amount of gas in storage likely eased to 4.8 percent above normal during the week ended August 28, down from 5.5 percent 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 this summer.