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U.S. natgas futures rise to one-week high on warmer outlook

U.S. natural gas futures rose on Friday to their highest in more than a week, buoyed by forecasts for warmer weather in two weeks and a projected increase in liquefied natural gas (LNG) exports.

Higher temperatures in two weeks were expected to boost demand for fuel to power generators and keep air conditioners humming. Still, traders said demand next week was likely be similar to this week, kept in check by mild weather and the Memorial Day holiday on Monday.

Front-month gas futures NGc1 rose 2.8 cents, or 0.9%, to settle at $2.986 per million British thermal units, their highest close since May 18.

For the week, the contract was up about 3% after falling about 2% last week.

For the month, the contract was up about 2% after gaining about 12% last month.

Data provider Refinitiv said gas output in the Lower 48 U.S. states has averaged 91 billion cubic feet per day (bcfd) in May, up from 90.6 bcfd in April. That, however, was still well below November 2019’s monthly record of 95.4 bcfd.

With warmer weather coming after the U.S. Memorial Day holiday week, Refinitiv projected average gas demand, including exports, would rise from 83.6 bcfd this week to 84.1 bcfd next week with a projected increase in LNG exports and 90.1 bcfd in two weeks as warmer weather boosts air conditioning use. The forecast for next week was slightly higher than Refinitiv predicted on Thursday.

The amount of gas flowing to U.S. LNG export plants has averaged 10.8 bcfd so far in May, down from April’s monthly record of 11.5 bcfd. The decline was attributable to short-term issues and normal spring maintenance at a few Gulf Coast plants and the gas pipelines that supply them.

But with European gas prices near their highest since September 2018 and Asian prices above $10 per mmBtu, analysts said they expect buyers around the world to keep purchasing all the LNG the United States can provide.

U.S. pipeline exports to Mexico, meanwhile, have averaged 6.0 bcfd so far in May, just off April’s monthly record of 6.1 bcfd, Refinitiv data showed.
Source: Reuters (Reporting by Scott DiSavino; Editing by David Gregorio Editing by David Goodman)

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