NEW YORK: US natural gas futures gained about 4% on Wednesday on a drop in output in recent weeks and forecasts for hot weather through at least early July, especially in Texas.
Prices rose even though the gas flow to US liquefied natural gas (LNG) export plants will remain low due to maintenance work.
In Texas, the power grid operator again projected electric use would break a record - this time on Wednesday - after forecast usage fell short of Tuesday’s all-time high as consumers heeded calls to conserve energy during an early summer heat wave.
That increased power demand should boost the amount of gas generators burn since Texas gets about half of its electricity from gas. 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%), according to federal energy data.
Front-month gas futures for July delivery on the New York Mercantile Exchange rose 10.5 cents, or 4.2%, to settle at $2.597 per million British thermal units (mmBtu).
Data provider Refinitiv said average gas output in the US Lower 48 states fell from a record 102.5 billion cubic feet per day (bcfd) in May to 101.6 bcfd so far in June due in part to ongoing pipeline maintenance in the Haynesville shale in Arkansas, Louisiana and Texas, and other basins.
The US National Hurricane Center (NHC) projected Tropical Storm Bret would remain a tropical storm as it moves west from the Atlantic Ocean over the next several days before dissipating in the Caribbean Sea around Sunday.
The NHC projected another system in the Atlantic had an 80% chance of strengthening into a cyclone over the next five days as it moves west toward the Caribbean.
Meteorologists forecast the weather in the Lower 48 states would turn from mostly near-normal from June 21-23 to hotter-than-normal from June 24-July 6.
With hot weather coming, Refinitiv forecast US gas demand, including exports, would rise from 94.2 bcfd this week to 98.8 bcfd next week. Those forecasts were similar to Refinitiv’s outlook on Tuesday.
US exports to Mexico rose to an average of 6.6 bcfd so far in June from 6.2 bcfd in May. That compares with a monthly record high of 6.7 bcfd in June 2021.
Gas flows to the seven big US LNG export plants fell to an average of 11.4 bcfd so far in June from 13.0 bcfd in May. That is well below the monthly record high of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc’s Sabine Pass in Louisiana and Freeport LNG in Texas.
The record flows in April exceeded the 13.8 bcfd of gas the seven big plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG.