U.S. natural gas futures edged up on Wednesday on a drop in daily output in recent days and forecasts for hot weather and heavy air conditioning demand to continue through late August.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 1.8 cents, or 0.7%, to $2.70 per million British thermal units (mmBtu). On Tuesday, the contract closed at its lowest since July 28.
Financial firm LSEG said average gas output in the U.S. Lower 48 states slid to 110.5 billion cubic feet per day (bcfd) so far in August, down from a monthly record high of 110.7 bcfd in July.
Record output and mild spring weather so far this year have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
Now, as they wait for Thursday's weekly federal inventory report, analysts projected the amount of gas in storage would rise to 6.6% above normal during the week ended July 31, up from 6.4% above normal during the previous week.
Gas inventories have remained in surplus despite weeks of above-normal temperatures so far this summer.
Meteorologists forecast the weather would remain mostly warmer than normal through August 20, forcing power generators to continue burning lots of gas to keep air conditioners humming. 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 rise from 112.2 bcfd this week to 114.3 bcfd next week. Those forecasts were similar to LSEG's outlook on Tuesday.
UNG•
