NEW YORK: US natural gas futures edged up about 1% on Friday on forecasts for the weather to remain hotter than normal through mid-August, keeping air conditioning demand extremely high, especially in Texas.
That price increase came despite a decline in the amount of gas flowing to US liquefied natural gas (LNG) export plants due to maintenance work.
Power demand in Texas hit an all-time high on Monday and Tuesday and will likely break that record again on Friday and early next week as homes and businesses keep their air conditioners cranked up during the lingering heat wave, according to forecasts by the Electric Reliability Council of Texas (ERCOT), the state’s power grid operator.
Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 1.2 cents, or 0.5%, to settle at $2.577 per million British thermal units (mmBtu).
For the week, the front-month was down about 2% after losing about 3% last week.
One factor that has weighed on gas futures in recent months - futures were down about 42% so far this year - has been persistently lower spot prices. Next-day gas at the Henry Hub benchmark in Louisiana was trading around $2.44 per mmBtu for Friday. Spot gas has traded over futures only once since the end of April.
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