U.S. natural gas futures climbed about 2% on Friday as the daily amount of gas flowing to liquefied natural gas (LNG) export plants increases, rising prices in Europe, and on forecasts for hotter-than-normal U.S. weather to continue through mid-July, especially in Texas.
In Texas, power use remained high after setting a record on Tuesday as a heat wave continues to bake the state, according to the state’s grid operator, the Electric Reliability Council of Texas (ERCOT).
Extreme heat boosts the amount of gas generators burn to produce power for air conditioning, especially in Texas, which gets most of its electricity from gas-fired plants. 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 August delivery on the New York Mercantile Exchange rose 5.4 cents, or 2.0%, to $2.755 per million British thermal units (mmBtu) at 10:44 a.m. EDT (1444 GMT).
For the week, the U.S. contract was up about 1%, putting it on track to rise for a fourth week in a row for the first time since April 2022.
For the month, the U.S. contract was up about 21% after falling about 6% in May.
For the quarter, the U.S. contract was up about 24% after dropping by a record 50% in the first quarter.
In Europe, gas prices at the Dutch Title Transfer Facility (TTF) benchmark in Europe jumped about 11% to A one-week high of around $12 per mmBtu.
SUPPLY AND DEMAND
Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 101.5 billion cubic feet per day (bcfd) so far in June from a record 102.5 bcfd in May.
On a daily basis, however, output was on track to rise 1.8 bcfd over the past three days to a preliminary two-week high of 102.0 bcfd on Friday.
Meteorologists forecast the weather in the Lower 48 states would remain hotter-than-normal through at least July 15.
Refinitiv forecast U.S. gas demand, including exports, would rise from 97.9 bcfd this week to 104.2 bcfd next week as the weather turns hotter, before easing to 103.6 bcfd in two weeks as temperatures moderate a bit. The forecasts for this week and next were similar to Refinitiv’s outlook on Thursday.
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 6.8 bcfd in June 2021.
Gas flows to the seven big U.S. LNG export plants fell to an average of 11.6 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 Corpus Christi in Texas.
On a daily basis, however, total feedgas to the seven LNG export facilities rose to a four-week high of 12.8 bcfd on Wednesday as the amount of gas flowing to Sabine jumped about 2 bcfd over the past week to around 4.3 bcfd. That compares with average feedgas to Sabine of 4.5 bcfd so far this year and 4.5 bcfd in all of 2022.
(Reporting by Scott DiSavino Editing by Nick Zieminski)