U.S. natural gas futures eased about 1% to a one-week low on Wednesday on rising output so far this month that should allow energy firms to keep injecting more gas into storage in coming weeks than usual for this time of year.
That price decline came despite forecasts for more demand over the next two weeks than previously expected.
On their second to last day as the front-month, gas futures for July delivery on the New York Mercantile Exchange fell 2.8 cents, or 0.8%, to $3.509 per million British thermal units (mmBtu) at 9:05 a.m. EDT (1305 GMT), putting the contract on track for its lowest close since June 12 for a second day in a row.
One factor that has weighed on gas prices since mid-April was the growing surplus of gas in storage.
Even though the weather was hotter than normal last week, analysts projected energy firms still injected more gas into storage than usual, likely boosting stockpiles to around 6% above the five-year average for this time of year.
Tuesday was the hottest day in more than a decade for millions of residents across the Northeast, weather forecaster AccuWeather said in a report, noting temperatures in Philadelphia and Boston hit 100 degrees Fahrenheit (37.8 Celsius), while New York City broke the record high from a heat wave in 1888.
To escape that heat, homes and businesses cranked up their air conditioners, boosting power prices to their highest since January in some markets and stressing some regional power grids.
U.S. power demand peaked around 729,270 megawatts (MW) during the peak 6 p.m. EDT hour on Tuesday, June 24, according to preliminary data from the U.S. Energy Information Administration (EIA). That was the most since August 2024 and compares with a record high of 745,020 MW at the peak 6 p.m. hour on July 15, 2024.
Even though power generators burn more gas during heat waves to produce electricity to keep those air conditioners humming, gas prices have dropped by about 15% since hitting an 11-week high of around $4.15 per mmBtu on June 20.
“The gas market advanced sharply last week on anticipation of this week’s heat wave and is relinquishing the gains this week on forecasts for next week’s cool down,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
And with futures for the rest of the summer trading well below last week’s high, with July (NGN25) at $3.51 per mmBtu and August (NGQ25) at $3.64, some analysts have started to say the market may have already seen its highest price for the summer on June 20.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 105.5 billion cubic feet per day so far in June, up from 105.2 bcfd in May, but still below the monthly record high of 106.3 bcfd in March due primarily to normal spring pipeline maintenance.
With more summer heat still to come, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 102.8 bcfd this week to 104.9 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
The average amount of gas flowing to the eight big U.S. LNG export plants fell to 14.1 bcfd so far in June, down from 15.0 bcfd in May and a monthly record high of 16.0 bcfd in April.
Source: Reuters