US natural gas futures edged higher on Tuesday on forecasts for more air conditioning demand this week than previously expected as warmer than normal weather lingers over much of the country. Front-month gas futures for October delivery on the New York Mercantile Exchange were up 3 cents, or 1.2%, to $2.557 per million British thermal units at 8:21 a.m. EDT (1221 GMT).
Meteorologists forecast temperatures would remain warmer over the eastern two-thirds of the country and colder in the western third through early October. That warmth prompted data provider Refinitiv to boost its projection for average gas demand in the lower 48 US states to 83.5 billion cubic feet per day (bcfd) for this week, up from its earlier forecast of 83.0 bcfd on Monday as power generators burn more gas to keep air conditioners humming.
Refinitiv forecast demand would also average 83.5 bcfd next week as the weather cools with the coming of autumn and heating demand starts to replace cooling demand. Traders noted warmer-than-normal weather in late September and early October tends to reduce overall demand because homes and businesses will not need to use much air conditioning or heat.
Export demand is also expected to rise in coming weeks as the country sends out more fuel to Mexico via pipelines and the rest of the world via liquefied natural gas (LNG). Gas flows to US LNG export plants rose to 6.2 bcfd on Sunday from a low of 5.7 bcfd last week following the shutdown of Dominion Energy Inc's Cove Point in Maryland for planned maintenance, according to Refinitiv data.
Refinitiv projected flows to LNG terminals could rise to 6.5 bcfd by the end of next week, putting it closer to the record high of 6.8 bcfd on August 25.
Exports to Mexico, meanwhile, slipped to 4.9 bcfd on Monday as flows on some pipes decreased, down from a record high 5.6 bcfd last week as gas started to move through the 2.6-bcfd Valley Crossing pipeline from Texas to Mexico. Traders said they expect exports to Mexico to return to record levels in coming weeks as Kinder Morgan Inc's Permian Express pipe in Texas enters service.
Comments
Comments are closed.