U.S. natural gas futures fell over 2% to more than a one-week low on Wednesday on forecasts for cooler weather, especially in the northeastern part of the U.S.
Front-month gas futures for September delivery on the New York Mercantile Exchange were down 5.4 cents, or 2%, at $2.61 per million British thermal units (mmBtu) at 9:49 a.m. EDT (13:49 GMT), its lowest level since Aug. 7. The contract fell nearly 5% on Tuesday.
Although the weather in the lower 48 states is forecast to remain hotter than normal through at least Aug. 31, it will be significantly milder during that period and heading into September than recently, especially in the heavily populated Northeast region. That is pulling back expectations for any late-season power sector demand for cooling, said Gary Cunningham, director of market research at Tradition Energy.
Data provider Refinitiv forecast U.S. gas demand, including exports, would rise from 104.9 billion cubic feet per day (bcfd) this week to 106.6 bcfd next week. These numbers were higher from Tuesday’s forecast.
Refinitiv said average gas output in the Lower 48 states was 101.8 bcfd so far in August, matching the reading in July, and not far from a monthly record of 102.2 bcfd in May.
Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 bcfd in July to 12.4 bcfd so far in August, mainly due to reductions at Venture Global LNG’s Calcasieu facility in Louisiana. That compares with a monthly record of 14.0 bcfd in April.
Market participants were keeping a close watch on any updates on possible strikes at Australian liquefied natural gas (LNG) facilities that would lead to supply disruptions. Gas prices in Europe were down 3.45 euros at 37.40 euros per megawatt hour (MWh) by 1421 GMT.
Woodside Energy said “positive progress” was being made on wage disputes at Australia’s largest LNG facility even as a union alliance said key differences remained ahead of further talks next Wednesday.
The U.S. is on track to become the world’s biggest LNG supplier in 2023 – ahead of recent leaders Australia and Qatar – as higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to the war in Ukraine.
(Reporting by Harshit Verma in Bengaluru; Editing by Paul Simao)