NEW YORK: US natural gas futures edged up about 1% to a two-week high on Wednesday on a decline in output and forecasts for warmer weather next week than previously expected that should boost the amount of gas power generators burn to keep air conditioners humming.
That price increase came despite forecasts for less demand this week than previously expected.
Another factor that has weighed on gas prices for much of this year was the oversupply of fuel left in storage after a mild winter.
There was still about 12% more gas in storage than normal, even though injections have been smaller than usual in 15 of the last 16 weeks after low prices early in the year prompted several producers to cut output.
Front-month gas futures for October delivery on the New York Mercantile Exchange rose 3 cents, or 1.4%, to $2.233 per million British thermal units (mmBtu) at 9:36 a.m. EDT (1336 GMT), putting the contract on track for its highest close since Aug. 19 for a second day in a row.
In the spot market, pipeline constraints caused next-day gas prices at the Waha hub in the Permian Shale in West Texas to fall to an all-time low and average in negative territory for a record 33rd time this year.
Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six times in 2020 and once in 2023.
In the Atlantic basin, the US National Hurricane Center (NHC) said there was a 30% chance a tropical disturbance in the Caribbean Sea could strengthen into a cyclone as it move into the southern Gulf of Mexico off Mexico over the next week.
Financial firm LSEG said gas output in the Lower 48 US states slid to an average of 102.1 billion cubic feet per day (bcfd) so far in September, down from 103.2 bcfd in August.
On a daily basis, output was on track to drop by 2.8 bcfd over the last four days to a preliminary 12-week low of 101.1 bcfd on Wednesday. Analysts, however, noted that preliminary data was often revised later in the day.
Meteorologists forecast weather across the country would remain mostly near normal through Sept. 9 before turning warmer than normal from Sept 10-19. Energy traders, however, noted that warmer-than-normal weather in mid-September would only average around 75 degrees F (23.9 degrees Celsius), down from an average of 79 F (26.1 C) in mid-August.
LSEG forecast average gas demand in the Lower 48, including exports, will fall from 102.3 bcfd this week to 101.3 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Tuesday.