U.S. natural gas futures climbed more 1% to a three-week high on Tuesday, helped by forecasts for hotter weather and higher gas demand for next week than previously projected.
Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange rose 3.4 cents, or about 1.6%, to $2.22 per million British thermal units, at 10:13 a.m. EDT (1413 GMT).
“The weather plays a big role in natural gas, short-term and long-term. And the weather has been a little on the warm side in most parts of the country,” said Thomas Saal, senior vice president for energy at StoneX Financial.
Financial firm LSEG estimated 233 cooling degree days (CDDs) over the next two weeks, slightly higher from 228 CDDs estimated on Monday. The normal for this time of year is 187 CDDs.
With hotter than usual weather on the horizon, LSEG forecast average gas demand in the Lower 48 states, including exports, to rise from 105.7 billion cubic feet per day (bcfd) this week to 108.3 bcfd next week.
LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 102.7 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.
“I think the market right now is wrestling with a high level of inventory, which is on the bearish side. But the injections going into storage are on the low side, which is a little bit on the bullish side,” Thomas Saal
The U.S. Energy Information Administration (EIA) said utilities added 21 billion cubic feet (bcf) of gas into storage during the week ended Aug. 2. That was lower than the 26-bcf build analysts forecast in a Reuters poll and compares with an injection of 25 bcf during the same week a year ago and a five-year (2019-2023) average increase of 38 bcf for this time of year.
Dutch and British gas prices fell on Tuesday morning, reversing the previous day’s gains as gas flows from Russia to Europe via Ukraine remained stable despite reports of possible damage to infrastructure.
Source: Reuters (Reporting by Sherin Elizabeth Varghese and Brijesh Patel in Bengaluru)