US natural gas futures rose four per cent on Tuesday, boosted by record gas flows to liquefied natural gas export plants and forecasts for more demand than previously expected over the next two weeks.
Front-month gas futures for January delivery on the New York Mercantile Exchange rose 15.3 cents, or four per cent, at $4.105 per million British thermal units by 08:59 AM ET.
Prices ended 0.5 per cent lower on Monday. "The demand for LNG is very strong and they're keeping those numbers near record high. So, that's definitely supporting the market right now," said Phil Flynn, senior analyst for Price Futures Group.
Average gas flows to the eight large US liquefied natural gas export plants have risen to 18.5 bcfd so far this month, up from a monthly record high of 18.2 bcfd in November.
On a daily basis, LNG export feedgas was on track to rise to 18.6 bcfd on Tuesday from an average of 18.1 bcfd last week due to increases at facilities including Cameron LNG's two-bcfd plant in Louisiana, Freeport LNG's 2.2-bcfd plant in Texas and Venture Global's 1.6-bcfd Calcasieu plant.
LSEG projected average gas demand in the lower 48 states, including exports, would rise from 127.9 bcfd this week to 136.0 bcfd over the next two weeks.
The forecast for next week was higher than LSEG's outlook on Monday. Meanwhile, meteorologists forecast weather across the country will remain mostly warmer than normal through January 7, keeping the amount of gas needed to heat homes and businesses lower than usual for this time of year.
"We saw the significant sell off due to the warm up that we're experiencing right now. But, as we go to later January, the weather models are turning colder again and that's causing some short covering," Flynn said.
Financial firm LSEG said average natural gas output in the lower 48 US states climbed to a record high of 111.1 billion cubic feet per day in December, surpassing November's monthly record of 109.6 bcfd.
The Trump administration suspended leases on Monday for five large offshore wind projects that are under construction off the US East Coast over what it called national security concerns.
Suspending offshore wind projects reduces expected renewable generation, which means power grids would likely rely more on natural gas for electricity.
Dutch and British gas contracts fell earlier on Tuesday, with some weather forecasts indicating a potentially quicker end to a cold spell, and as supply remains stable.
Meanwhile, Myanmar is expected to resume liquefied natural gas imports next year after taking delivery of half a cargo last month, ending a more than four-year hiatus in shipments, data and analytics firm Kpler said.
(Reporting by Anmol Choubey in Bengaluru; editing by Barbara Lewis)
