NEW YORK: US natural gas futures climbed about 2% on Friday on forecasts for higher demand over the next two weeks than previously expected as power generators burn more gas to keep air conditioners humming during a brutal heat wave. That price increase came even as producers boost output and the amount of gas in storage remains well above normal levels for this time of year.

Analysts forecast there was still about 19% more gas in storage than usual for this time of year even though output reductions earlier in the year kept weekly injections below normal over the past seven weeks. EIA/GAS]

Front-month gas futures for August delivery on the New York Mercantile Exchange rose 3.9 cents, or 1.5%, to $2.724 per million British thermal units (mmBtu) at 9:09 a.m. EDT (1309 GMT).

For the week, prices were down about 1% after falling 6% last week and 1% two weeks ago.

For the month, prices were up about 4% after soaring about 30% in May and gaining 13% in April. For the quarter, prices were up about 52% after dropping 30% in the first quarter.

In Texas, the Electric Reliability Council of Texas (ERCOT), the power grid operator for most of the state, said peak demand came close but did not break the record for the month of June on Thursday as had been expected. ERCOT, however, projects that demand will break the June record on Friday as homes and businesses crank up their air conditioners to escape the heat blanketing the state.

In the spot market, meanwhile, next-day gas prices at the Waha hub plunged 604% to a negative $2.78 per mmBtu, the lowest since mid April, as pipeline constraints trap gas in the Permian Shale. That is the second time gas prices fell into negative territory during a brutal heat wave this week and the 19th time so far this year.

Financial firm LSEG said gas output in the Lower 48 US states rose to an average of 98.6 billion cubic feet per day (bcfd) so far in June, up from a 25-month low of 98.1 bcfd in May. That compares with 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 13.

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 103.2 bcfd this week to 100.8 bcfd with less heat and the July 4th holiday next week before soaring to 106.8 bcfd in two weeks when the weather is expected to turn extremely hot. The forecast for this week and next were higher than LSEG’s outlook on Thursday.

Gas flows to the seven big US LNG export plants eased to 12.8 bcfd so far in June, down from 12.9 bcfd in May and a monthly record high of 14.7 bcfd in December 2023.

That decline was due to plant and pipeline maintenance at several facilities, including Freeport LNG and Cheniere Energy’s Corpus Christi in Texas and Cameron LNG, Cheniere’s Sabine Pass and Venture Global’s Calcasieu Pass in Louisiana.