U.S. natural gas futures edged up to a two-week high on Friday on rising pipeline exports and forecasts calling for hotter weather and higher-than-expected air conditioning demand over the next two weeks.
Front-month gas futures rose 2.3 cents, or 1.3%, to settle at $1.808 per million British thermal units, their highest since July 8. For the week, the contract gained about 5% after falling almost 5% last week.
As the U.S. Atlantic hurricane season ramps up, Tropical Storm Hanna formed in the Gulf of Mexico and was expected to hit South Texas over the weekend. Additionally, Tropical Storm Gonzalo was expected to strengthen into a hurricane as it churns from the Atlantic into the Caribbean Sea.
Refinitiv said production in the Lower 48 U.S. states averaged 88.4 billion cubic feet per day (bcfd) in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November.
Refinitiv projected U.S. demand, including exports, will slide from 92.7 bcfd this week to 91.4 bcfd next week before rising to 93.4 bcfd in two weeks as hot weather returns.
Pipeline gas flowing to U.S. LNG export plants has averaged 3.4 bcfd (35% utilization) in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February.
U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners.
Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.63 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.