CHICAGO: US natural gas futures gained on Friday as the weather outlook turned slightly warmer, potentially boosting demand for gas used for air conditioning. Front-month gas futures rose 2.1 cents, or 0.5%, to settle at $3.851 per million British thermal units.
Prices touched a one-month trough on Thursday, pressured by a weekly storage report that showed a larger-than-expected injection.
"I think we'll see an expansion in the storage deficit going into next month and that's a dynamic that should lift us to about $4," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, noting that current price gains in the face of a bearish storage attest to a fairly firm underpinning.
"I think we'll see an expansion in the storage deficit going into next month and that's a dynamic that should lift us to about $4 and current price gains in face of a bearish storage report points to a fairly firm underpinning," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Also, LNG exports should continue to support the market for the rest of 2021, Ritterbusch added.
According to data provider Refinitiv, temperatures are expected to be slightly warmer in the next two weeks with 213 cooling degree days (CDDs). That compares with a 30-year average of 171 and 199 in Thursday's forecast.
Average US gas demand, including exports, is expected to rise to 95.1 billion cubic feet per day (bcfd) this week from 93.3 in the prior week.
Refinitiv also said gas output in the US Lower 48 states has averaged about 92 bcfd so far in August, up from 91.6 bcfd in July. That compares with an all-time high of 95.4 bcfd in November 2019.
The amount of gas flowing to US LNG export plants is seen at 10.9 bcfd next week. That compares with an average for LNG feedgas of 10.4 bcfd so far in August, 10.8 bcfd in July and a record 11.5 bcfd in April.
With European and Asian gas prices more than three times higher than the US fuel, analysts expect LNG exports to remain elevated this year.
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