US natural gas futures edge up on rising global gas prices

US natural gas futures edged up on Tuesday on expectations the increase in global gas prices to their highest in years would boost US liquefied natural gas (LNG) exports to fresh record highs this summer.

Front-month gas futures for July delivery on the New York Mercantile Exchange (NYMEX) rose 3.8 cents, or 1.2%, to $3.229 per million British thermal units (mmBtu) at 7:30 a.m. EDT (1130 GMT). On Monday, the contract closed at its lowest since June 10 for a second day in a row.

US speculators boosted their long futures and options positions on the NYMEX last week by the most since June 2020 to their highest since November 2018 as soaring global gas prices prompt buyers around the world to keep purchasing all the LNG the United States can produce.

Gas prices in Europe and Asia both traded over $10 per mmBtu, with the Title Transfer Facility (TTF) in the Netherlands reaching its highest since January 2014.

Data provider Refinitiv said gas output in the Lower 48 US states averaged 91.6 billion cubic feet per day (bcfd) so far in June, up from 91.0 bcfd in May but still well below the monthly record high of 95.4 bcfd in November 2019.

With the coming of seasonally hotter summer weather, Refinitiv projected average gas demand, including exports, would rise from 87.3 bcfd this week to 91.9 bcfd next week. Those forecasts were lower than Refinitiv projected on Monday.

The amount of gas flowing to US LNG export plants averaged 9.8 bcfd so far in June, down from 10.8 bcfd in May and an all-time high of 11.5 bcfd in April. Traders noted LNG feedgas was down this month mostly due to short-term maintenance at the Sabine Pass and Cameron export plants in Louisiana and some of the pipelines that provide them with fuel.

US pipeline exports to Mexico averaged 6.7 bcfd so far in June, putting them on track to top May's 6.2-bcfd record.

In the power market, brutal heatwaves tested the California and Texas electric grids last week. Both grids passed those tests by not resorting to rotating blackouts to maintain grid reliability after consumers heeded calls to conserve energy.

Peak demand for power in the Electric Reliability Council of Texas (ERCOT), which operates the grid in most of Texas, soared to a record for the month of June of 69,943 megawatts (MW) on June 14. ERCOT projected peak demand would break that June record on June 24 at 70,788 MW and June 25 at 71,165 MW.