NEW YORK: US natural gas futures rose more than 4% to a near one-week high on Wednesday, boosted by forecasts for hotter weather over the next two weeks that should boost air conditioning demand.
Front-month gas futures for September delivery on the New York Mercantile Exchange were up 5.8 cents, or about 3%, to $2.07 per million British thermal units at 9:37 a.m. EDT (1337 GMT).
“The southern tier of the country has seen temperatures rise again, with Texas seeing triple-digit heat and calm winds leading to strong power-sector gas demands, and weather for later in the month has heat continuing, which is giving some support, as the storage surplus is expected to continue to erode,” said Gary Cunningham, director of market research at Tradition Energy.
Financial firm LSEG estimated 220 cooling degree days (CDDs) over the next two weeks, slightly lower from 221 CDDs estimated on Tuesday. The normal for this time of year is 190 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 103.6 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.
LSEG forecast average gas demand in the Lower 48 states, including exports, to rise to 109.7 bcfd this week from 105.8 bcfd last week, before declining to 104.5 bcfd next week.
US natural gas output will average around 103.3 billion cubic feet per day (bcfd) this year, the US Energy Information Administration (EIA) said in its August edition of the short-term energy outlook report on Tuesday.
That compares with 103.8 bcfd produced last year, and is a slight downgrade from a forecast of 103.5 bcfd in the July edition of the report.
Major US natural gas producers are preparing to further curtail production in the second half of 2024, after prices sank nearly 40% over the past two months. “Long-term markets could see some selling after the D.C. Circuit Court ruling yesterday, which vacated the FERC approvals for both Texas LNG and the Rio Grande expansion,” Tradition Energy’s Cunningham added. The US court overturned the Federal Energy Regulatory Commission’s authorization for NextDecade’s Rio Grande LNG project for not issuing a supplemental environmental impact statement, the company said on Tuesday.
Meanwhile, Dutch and British wholesale gas prices edged lower on Wednesday, as ample supply offset the impact of forecasts that hot weather next week will increase power sector demand and concerns about possible disruption as tensions flare in the Middle East.