U.S. natural gas futures edged up on Wednesday as the market focused more on a slowdown in output rather than a forecast decline in air conditioning demand and low liquefied natural gas exports.
Front-month gas futures rose 1.3 cents, or 0.7%, to settle at $1.780 per million British thermal units.
Refinitiv said production in the Lower 48 U.S. states fell to an average of 88.5 billion cubic feet per day (bcfd) so far in June from a one-year low of 89.2 bcfd in May and an all-time monthly high of 95.4 bcfd in November.
With milder weather expected in mid-June, Refinitiv forecast U.S. demand, including exports, would slide from 81.5 bcfd this week to 79.7 bcfd next week.
The amount of pipeline gas flowing to U.S. LNG export plants dropped to an average of 4.1 bcfd (42% utilization) so far in June, down from an eight-month low of 6.4 bcfd in May and a monthly record high of 8.7 bcfd in February. Utilization was about 90% in 2019.
U.S. LNG exports have dropped in recent months after buyers canceled cargoes for the summer because gas prices have mostly been higher in the United States than in Europe since late April, global demand destruction from the coronavirus and record high stockpiles in Europe.
In fact, some energy firms are sending LNG to the United States for storage.
U.S. pipeline exports, however, are rising as North American consumers crank up their air conditioners.
Refinitiv said pipeline exports to Canada averaged 2.3 bcfd so far in June, up from a seven-month low of 2.2 bcfd in May but still well below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.3 bcfd so far this month, up from 4.8 bcfd in May but shy of the record 5.6 bcfd in March.