NEW YORK: US natural gas futures were little changed on Friday, as rising inventory offset support from forecasts for hot weather and higher cooling demand.
Front-month gas futures for September delivery on the New York Mercantile Exchange settled 0.7 cent, or 0.3%, higher at $2.77 per million British thermal units (mmBtu) after dropping 6.6% on Thursday. However, the contract was up 7.5% for the week.
“The biggest factor is that our production is still going strong. The EIA storage report certainly has shown that the production is strong enough to meet the domestic demand despite the abnormally high temperatures for the last week,” said Zhen? Zhu, managing consultant at CH Guernsey and Co in Oklahoma City.
The US Energy Information Administration (EIA) reported on Thursday that utilities added 29 billion cubic feet (bcf) of gas into storage during the week ended Aug 4.
That was slightly bigger than the 25-bcf build analysts forecast in a Reuters poll, and lifted stockpiles to 3.030 trillion cubic feet (tcf), 11% above the five-year average.
Power demand in Texas hit an all-time high on Thursday for the third time this week and will likely break that record again 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 from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.
Meteorologists forecast the weather in the lower 48 states will remain hotter than normal through at least Aug. 26.
Data provider Refinitiv forecast US gas demand, including exports, would rise from 103.0 billion cubic feet per day (bcfd) this week to 104.5 bcfd next week as power generators burn more of the fuel and exports rise. The forecast for next week was lower than Refinitiv’s outlook on Thursday.
US energy firms this week cut the number of oil and natural gas rigs operating, which is an early indicator of future output, for a fifth week in a row, energy services firm Baker Hughes said in its weekly report.
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