NEW YORK: US natural gas futures climbed about 2% on Monday on forecasts for more demand next week than previously expected as a brutal heat wave continues to blanket much of the country, forcing power generators to burn more gas to produce electricity to keep air conditioners humming.
That price increase came despite forecasts for less demand this week than previously expected, rising output and a drop in the amount of gas flowing to liquefied natural gas (LNG) export plants after Freeport LNG in Texas ramped down ahead of Hurricane Beryl.
Hurricane Beryl lashed Texas with strong winds and heavy rain as it churned inland, forcing the closure of oil ports, cancellation of hundreds of flights and leaving nearly 2 million homes and businesses without power.
Front-month gas futures for August delivery on the New York Mercantile Exchange rose 3.4 cents, or 1.5%, to $2.353 per million British thermal units (mmBtu) at 10:48 a.m. EDT (1448 GMT).
Even though prices were up for the first time in six trading days, futures remained in technically oversold territory for a fourth day in a row for the first time since February.
Higher prices in recent weeks, however, prompted some producers, including EQT and Chesapeake Energy, to start pulling more gas out of the ground.
EQT is the nation’s biggest gas producer and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy.
Financial firm LSEG said gas output in the Lower 48 US states rose to an average of 102.4 billion cubic feet per day (bcfd) so far in July.
That was up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May when many producers reduced drilling activities after prices fell to 3-1/2-year lows in February and March. US output hit a monthly record high of 105.5 bcfd in December 2023.
Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 23.
With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 105.7 bcfd this week to 107.0 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Friday, while the forecast for next week was higher.
Gas flows to the seven big US LNG export plants fell to 12.1 bcfd so far in July after Freeport LNG in Texas ramped down ahead of Hurricane Beryl on Sunday, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
The US became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
Gas was trading at $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $12 at the Japan Korea Marker (JKM) benchmark in Asia.
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