NEW YORK: US natural gas futures gained more than 1% on Tuesday as forecasts for a return to warmer than usual weather in the coming weeks that could boost the amount of gas power generators burn, prompting some short covering from traders.
Front-month gas futures for September delivery on the New York Mercantile Exchange were up 2.4 cents, or about 1.2%, to $1.97 per million British thermal units at 10:31 a.m. EDT (1431 GMT).
Prices fell more than 1% to a one-week low on Monday on forecasts for lower demand and against a backdrop of falling global stock markets.
“Despite some cooling across much of the mid continent within the next few days, partially due to the effects of hurricane Debby along the east coast, a return to broad based warmer than normal trends across virtually the entire US next week will continue to offer near term price support,” energy advisory Ritterbusch and Associates said in a note.
“Some strengthening in European gas pricing is also being supportive as has been the recent recovery in export activity but for now, elevated production near 103 bcf/d remains as an upside price limiter that will likely be prompting some larger than normal storage injections,” Ritterbusch said.
Financial firm LSEG estimated 221 cooling degree days (CDDs) over the next two weeks, slightly lower from 225 CDDs estimated on Monday. The normal for this time of year is 191 CDDs.
Cooling degree days, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius).
LSEG said gas output in the Lower 48 states had risen to an average of 103.8 billion cubic feet per day (bcfd) so far in August, up from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.
Dutch and British wholesale gas prices edged up, rebounding slightly after losses in the previous session, but supply remains healthy and demand largely flat.
Hurricane Debby made landfall as a Category 1 storm in the Big Bend region of Florida’s Gulf Coast on Monday morning and began a slow crawl across the state. More than 113,000 homes and businesses in Florida were left without electricity as Debby, now a tropical storm, slammed into the state’s Gulf Coast, according to data from PowerOutage.us.
However, LSEG forecast average gas demand in the Lower 48 states, including exports, to fall from 110.0 billion cubic feet per day (bcfd) this week to 104.9 bcfd next week.
Meanwhile, Japanese city gas provider Osaka Gas signed a long-term Heads of Agreement(HOA) with UAE’s ADNOC for the delivery of up to 0.8 million metric tons per annum of liquefied natural gas (LNG) to secure stable supplies.