Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia's invasion of Ukraine in 2022 and the U.S.-Israeli war with Iran this year.
Prices in the U.S., however, have not reacted much to the war in Iran because the U.S. produces all the gas it needs domestically and U.S. LNG companies are already liquefying as much fuel as they can. No matter how high global gas prices go, the U.S. cannot export much more LNG until some units under construction enter service in coming months and years.
Supply, demand and weather outlook
Financial firm LSEG said average gas output in the U.S. Lower 48 states rose to 111.3 billion cubic feet per day (bcfd) so far in August, up from a monthly record high of 110.7 bcfd in July.
Record output and mild spring weather this year have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
Gas inventories have remained in surplus despite weeks of above-normal temperatures this summer.
Meteorologists forecast the weather will remain mostly warmer than normal through August 29, forcing power generators to continue burning significant volumes of gas to keep air conditioners running. About 40% of U.S. power generation comes from gas-fired plants.
LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 115.5 bcfd this week to 113.1 bcfd next week and 111.9 bcfd in two weeks. The forecast for next week was higher than LSEG's outlook on Thursday.
Storm-related outages and LNG exports
Some 276,000 homes and businesses were still without power on Friday after severe storms battered the U.S. Midwest earlier this week, according to data from PowerOutage.us. That is down from over 729,000 outages on Wednesday. Depending on the length of those outages, the amount of gas burned to produce electricity could decline this week.
Average gas flows to the nine big U.S. LNG export plants have eased to 17.1 bcfd so far in August, down from 17.2 bcfd in July and a monthly record high of 17.4 bcfd in June.
The U.S. became the world's biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost U.S. gas.
Around the world, gas was trading around $21 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan-Korea Marker (JKM) benchmark in Asia.
Futures rise on hotter weather forecasts
U.S. natural gas futures edged up on forecasts for more demand next week than previously expected, with the weather expected to remain hotter-than-normal through the end of August.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 0.6 cent, or 0.2%, to settle at $2.733 per million British thermal units (mmBtu), after rising as high as $2.783 per mmBtu earlier in the session.
That put the contract on track to gain about 3% this week after falling around 18% over the prior seven weeks.
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