U.S. natgas futures ease on forecasts for less demand next week

U.S. natural gas futures eased on Friday on forecasts for less air conditioning demand next week than previously expected.

The small price decline came despite forecasts calling for the weather to remain much hotter than normal through late August.

Front-month gas futures NGc1 fell 3 cents, or 0.7%, to $4.110 per million British thermal units (mmBtu) at 9:08 a.m. EDT (1308 GMT).

But after closing at its highest since December 2018 earlier in the week, the front-month was still on track to gain over 5% this week after sliding almost 4% last week.

In the power market, the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, projected hot weather next week would top the current high for the year of 72,856 megawatts (MW) set on July 26. Next week’s peaks, however, were expected to fall short of the grid’s all-time high of 74,820 MW in August 2019.

Data provider Refinitiv said gas output in the U.S. Lower 48 states rose to an average of 91.9 billion cubic feet per day (bcfd) so far in August from 91.6 bcfd in July. That was still well below the all-time high of 95.4 bcfd in November 2019.

With hotter weather expected, Refinitiv projected average gas demand, including exports, would rise from 91.2 bcfd this week to 93.9 bcfd next week and 95.9 bcfd in two weeks as power generators burn more fuel to meet rising air conditioning use. The forecast for next week, however, was lower than Refinitiv predicted on Thursday.

The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants slipped to an average of 10.4 bcfd so far in August due to a reduction at the Cameron plant in Louisiana, down from 10.8 bcfd in July and a record 11.5 bcfd in April.

With European TRNLTTFMc1 and Asian JKMc1 gas both trading over $15 per mmBtu, analysts said buyers around the world will keep purchasing all the LNG the United States can produce since the U.S. fuel was selling for just around $4. Prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, were on track to hit a record high for a second day in a row on Friday.

U.S. pipeline exports to Mexico slipped to an average of 6.3 bcfd so far in August from 6.5 bcfd in July and a record 6.8 bcfd in June.
Source: Reuters (Reporting by Scott DiSavino; Editing by Steve Orlofsky)