Financial firm LSEG said average gas output in the U.S. Lower 48 states has risen to 111.1 billion cubic feet per day so far in August, up 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.
Analysts said the amount of gas in storage would likely ease to 6.6% above normal during the week ended August 7, down from 6.7% above normal in the previous week, according to estimates ahead of the weekly federal inventory report on Thursday. EIA/GAS NGAS/POLL
Gas inventories have remained in surplus despite weeks of above-normal temperatures so far this summer.
Hot weather boosts power burn demand
Meteorologists forecast the weather would remain mostly warmer than normal through August 26, 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 114.2 bcfd this week to 110.5 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.
Natural gas futures hold near two-week high
U.S. natural gas futures held near a two-week high on Tuesday as bullish forecasts for hot weather through late August offset a bearish decline in liquefied natural gas export flows, near-record output, and forecasts for weaker demand over the next two weeks than previously expected.
Front-month gas futures for September delivery NGc1 on the New York Mercantile Exchange fell 0.1 cent to $2.793 per million British thermal units (mmBtu). On Monday, the contract closed at its highest price since July 24.
LNG export flows ease while global prices stay high
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.
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.
Around the world, gas was trading around $20 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and $21 at the Japan-Korea Marker (JKM) JKMc1 benchmark in Asia. NG/EU
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