U.S. natural gas futures jumped about 4% to a one-week high on Monday with an increase in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants as Freeport LNG in Texas started exporting cargoes again after shutting for Hurricane Beryl in early July.
Traders also noted that the hottest weather of the summer is forecast to blanket much of the U.S. Lower 48 states in early August.
That heat could boost the amount of gas power generators burn to produce electricity to keep air conditioners humming to a fresh record high, topping the current all-time high set on July 9.
Front-month gas futures for August delivery on the New York Mercantile Exchange rose 8.4 cents, or 4.0%, to $2.212 per million British thermal units (mmBtu) by 10:04 a.m. EDT (1404 GMT).
That put the contract up for a third day in a row for the first time since early June and on track for its highest close since July 12.
With gas futures down in five of the past six weeks, speculators last week cut their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for a fourth week in a row to their lowest since April, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
In other news, Australian energy firm Woodside Energy Group agreed to buy U.S. LNG developer Tellurian for about $1.2 billion in a deal that could increase the chances Tellurian’s Driftwood LNG export plant in Louisiana will be built at some point in the future.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.1 bcfd so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.4 bcfd in May. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
Meteorologists projected weather across the Lower 48 states would remain mostly near normal through July 28 before turning hotter than normal through at least Aug. 6.
With hotter weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 104.7 bcfd this week to 105.9 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Friday, while its forecast for next week was lower.
Gas flows to the seven big U.S. LNG export plants fell to 11.5 bcfd so far in July after Freeport shut before Hurricane Beryl hit the Texas Coast on July 8, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
With Freeport starting to export LNG over the weekend for the first time since Beryl, the amount of gas flowing to the 2.1-bcfd plant was on track to rise to around 1.0 bcfd on Monday, up from about 0.8 bcfd on Sunday after pulling in almost no gas from July 7-15.
(Reporting by Scott DiSavino; Editing by Kirsten Donovan)