U.S. natural gas futures edge higher on hotter weather outlook
U.S. natural gas futures edged up to a one-week high on Monday on forecasts for hotter weather and higher demand over the next two weeks than previously expected.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 3.4 cents, or 1.2%, to settle at $2.781 per million British thermal units (mmBtu), their highest close since July 24.
With futures down about 15% over the past six weeks, speculators last week boosted their net short futures and options positions on the NYMEX and Intercontinental Exchange to their highest levels since March 2024, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report.
Supply and demand
Financial firm LSEG said average gas output in the U.S. Lower 48 states has held at so far in August, matching the monthly record high set in July.
110.8 billion cubic feet per day (bcfd)
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.
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 18, 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 112.6 bcfd this week to 114.4 bcfd next week. Those forecasts were higher than LSEG's outlook on Friday.
Average gas flows to the nine big U.S. LNG export plants have fallen to 16.0 bcfd so far in August due in part to maintenance at several facilities, including Freeport LNG's 2.4-bcfd plant in Texas. That figure is down from an average of 17.2 bcfd in July and a monthly record high of 18.8 bcfd in April.
Energy traders noted, however, the LNG feedgas numbers for August 2-3 were artificially depressed due to a computer problem making flows look lower than they actually are at a couple of pipes feeding Cheniere Energy's LNG export plants at Sabine in Louisiana and Corpus Christi in Texas.
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) benchmark in Europe and $21 at the Japan-Korea Marker (JKM) benchmark in Asia.
Key market and inventory figures
U.S. weekly natgas storage change: +32 bcf forecast, versus +28 actual the prior week
U.S. total natgas in storage: 3,116 bcf forecast, versus 3,084 actual the prior week
U.S. total storage versus 5-year average: +6.6% forecast, versus +6.4% the prior week
Henry Hub front-month futures: $2.75 current day, $2.75 prior day
UNG•
