NEW YORK: US natural gas futures gained about 3% on Monday on forecasts that persistent hot weather through early September would keep air conditioning demand high, especially in Texas and other Central US states.
That price increase came despite forecasts for slower than expected gas demand over the next two weeks.
Power demand in Texas and other US Central states will likely break records this week as homes and businesses crank up air conditioners to escape another brutal heat wave moving across the country.
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.
The US National Hurricane Center (NHC) projected a tropical cyclone could form in the Gulf of Mexico later Monday and hit the South Texas coast as a tropical storm on Tuesday.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 8.1 cents, or 3.2%, to settle at $2.632 per million British thermal units (mmBtu).
Gas futures are down about 41% so far this year, and persistently lower spot prices have weighed in recent months. Next-day gas at the Henry Hub benchmark in Louisiana was trading around $2.44 per mmBtu for Monday. Spot gas has traded over futures just twice since the end of April.
Data provider Refinitiv said average gas output in the US Lower 48 states has eased to 101.7 billion cubic feet per day (bcfd) so far in August from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May.
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