NEW YORK: US natural gas futures gained about 4% to a three-month high on Friday on a recent drop in output and forecasts for demand to soar as the weather turns hot in late June, especially in Texas.
Power use in Texas is expected to break records next week as homes and businesses crank up their air conditioners to escape the first heat wave of the 2023 summer season, the state’s power grid operator projected on Friday.
That will boost the amount of gas burned by power generators, since Texas gets most of its power from gas. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data.
In addition to preparing for the coming heat, utilities in Texas and other Gulf Coast states were restoring power to over 664,000 customers left without service after severe storms battered the region.
Front-month gas futures for July delivery on the New York Mercantile Exchange rose 9.9 cents, or 3.9%, to settle at $2.632 per million British thermal units (mmBtu), their highest close since March 7.
That put the front-month up for a fifth day in a row and a 10th time in the last 11 days.
Those price gains also kept the contract in technically overbought territory, with a relative strength index (RSI) above 70 for a second day in a row for the first time since mid-May.
For the week, the front-month rose about 17% after gaining about 4% last week. That was its biggest weekly gain since early March when it jumped about 23%.
In Europe, meanwhile, gas prices at the Dutch Title Transfer Facility (TTF) benchmark remained extremely volatile, plunging by around 22% on Friday after rising about 65% during the prior seven days.
Data provider Refinitiv said average gas output in the US Lower 48 states has slid to 101.9 billion cubic feet per day (bcfd) so far in June, down from a monthly record of 102.5 bcfd in May.
As the wildfires in Alberta and other Canadian provinces died down, gas exports from Canada were on track to rise to 8.3 bcfd on Friday, up from 7.4 bcfd on Thursday and 7.2 bcfd on Tuesday and Wednesday.
That compares with average Canadian exports of 7.8 bcfd so far in June, 7.4 bcfd in May when the wildfires were raging, 8.3 bcfd so far in 2023 and 9.0 bcfd in 2022. About 8% of the gas consumed in or exported from the United States comes from Canada.
Meteorologists forecast the weather would remain mostly near normal from June 16-22 before turning hotter than normal from June 23-July 1.
With warmer weather coming, Refinitiv forecast US gas demand, including exports, would rise from 93.2 bcfd this week to 96.0 bcfd next week and 101.8 bcfd in two weeks. The forecasts for this week and next were similar to Refinitiv’s outlook on Thursday.
Gas flows to the seven big US LNG export plants have fallen to an average of 11.6 bcfd so far in June from 13.0 bcfd in May.
That is well below the monthly record high of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc’s Sabine Pass in Louisiana and Freeport LNG in Texas.
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