U.S. natural gas futures held steady on Wednesday as the drop in output in recent weeks and forecasts for the weather to remain hot through at least early July offset expectations the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants will remain low due to maintenance work.
In Texas, meanwhile, the power grid operator again projected electric use would break a record – this time on Wednesday – after forecast usage fell short of the all-time high on Tuesday as consumers heeded calls to conserve energy during an early summer heat wave.
That increase in power demand should boost the amount of gas generators burn since Texas gets about half of its electricity from gas. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data.
Front-month gas futures for July delivery on the New York Mercantile Exchange rose 0.7 cent, or 0.3%, to $2.499 per million British thermal units at 9:25 a.m. EDT (1325 GMT).
Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell from a record 102.5 billion cubic feet per day (bcfd) in May to 101.6 bcfd so far in June due in part to ongoing pipeline maintenance in the Haynesville shale in Arkansas, Louisiana and Texas, and other basins.
The U.S. National Hurricane Center projected Tropical Storm Bret would remain a tropical storm as it moves west from the Atlantic Ocean over the next several days before dissipating in the Caribbean Sea around Sunday.
The center projected another system in the Atlantic had a 70% chance of strengthening into a cyclone over the next five days as it moves west toward the Caribbean.
Meteorologists forecast the weather in the Lower 48 states would turn from mostly near-normal from June 21-23 to hotter-than-normal from June 24-July 6.
With hot weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 94.2 bcfd this week to 98.8 bcfd next week. Those forecasts were similar to Refinitiv’s outlook on Tuesday.
U.S. exports to Mexico rose to an average of 6.6 bcfd so far in June, up from 6.2 bcfd in May. That compares with a monthly record high of 6.7 bcfd in June 2021.
Gas flows to the seven big U.S. LNG export plants fell to an average of 11.4 bcfd so far in June from 13.0 bcfd in May. That is well below the monthly record high of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc’s Sabine Pass in Louisiana and Freeport LNG in Texas.
The record flows in April were higher than the 13.8 bcfd of gas the seven big plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG.
(Reporting by Scott DiSavino; editing by Jonathan Oatis)