NEW YORK: US natural gas futures rose more than 2% on Friday after touching their lowest in close to two-months during in the session, boosted by forecasts for hotter weather over the next two weeks that should boost air-conditioning demand.
Front-month gas futures for August delivery on the New York Mercantile Exchange settled about 2.7% higher at $2.329 per million British thermal units (mmBtu). During the session, the contract dropped to its lowest since May 13.
“We are trying to rebound on the expectations that the outlook going forward is going to be better,” said Phil Flynn, an analyst at Price Futures Group, adding that, because of the potential demand destruction due to the storm Beryl and a bearish weekly inventory report that showed that production and supplies came in the higher than anticipated it’s almost amazing that the market is holding up as well.
“On the flip side of that, there are some people that are calling for a return to some hot weather in the coming weeks and that may give the market some support.”
Financial firm LSEG estimated 257 cooling degree days (CDDs) over the next two weeks in the Lower 48 US states, slightly higher from the 252 CDDs estimated on Thursday. The normal is 204 CDDs for this time of year.
LSEG forecast average gas demand in the Lower 48, including exports, at 107.1 billion cubic feet per day (bcfd) this week, before easing to 106.2 bcfd next week.
LSEG said gas output in the Lower 48 has risen to an average of 102.1 billion cubic feet per day (bcfd) in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May. US output hit a monthly record high of 105.5 bcfd in December 2023.
Data from the US Energy Information Administration on Wednesday indicated that utilities added 65 billion cubic feet (bcf) of gas into storage during the week ended July 5.
That was more than the 55-bcf build analysts forecast in a Reuters poll and compares with an increase of 57 bcf in the same week last year and a five-year (2019-2023) average rise of 57 bcf for this time of year.
That build boosted the amount of gas in storage to around 19% above normal levels for this time of year.
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