US natural gas prices steady near two-week high, outages at LNG export plants reported
US natural gas futures held near a two-week high on Thursday as hot weather keeps the amount of gas power generators must burn high to keep air conditioners humming.
Front-month gas futures for August delivery on the New York Mercantile Exchange rose 0.8 cents, or 0.2 per cent, to $3.559 per million British thermal units, putting the contract on track for its highest close since June 27 for a third day in a row.
That lack of price movement came after the release of a federal storage report showing that near-record production allowed energy firms to add more gas into storage than usual last week despite hotter than normal weather so far this summer.
The US Energy Information Administration (EIA) said energy firms added 46 billion cubic feet of gas into storage during the week ended July 11.
That was in line with the 46-bcf build analysts forecast in a Reuters poll and compares with an increase of 18 bcf during the same week last year and an average of 41 bcf over the 2020-2024 period.
The build left gas stockpiles around six per cent above the five-year normal for this time of year.
The US National Hurricane Center downgraded the chance that a tropical system off the coast of Louisiana and Mississippi would strengthen into a tropical cyclone over the next week to 30 per cent from 40 per cent. Analysts say that while tropical storms in the Gulf can knock some gas production out of service, only about two per cent of all US gas comes from the federal offshore Gulf of Mexico.
They said storms were more likely to be demand-destroying events that can reduce the amount of gas power generators burn by leaving millions of homes and businesses without electricity and cutting gas exports by shutting Gulf Coast LNG export plants.
Meteorologists forecast the weather in the Lower 48 US states would mostly remain hotter than normal through at least August 1, with the hottest days of the summer expected next week.
Temperatures across the country will average around 81 degrees fahrenheit (27.2 degrees celsius) on July 24, on track to top this summer's current hottest day of 80 degrees fahrenheit on June 24 but still below the daily average record high of 83 degrees fahrenheit on July 20, 2022, according to data from financial firm LSEG going back to 2018.
LSEG said average gas output in the Lower 48 rose to 107 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.
LSEG forecast average gas demand in the Lower 48, including exports, would slide from 110 bcfd this week to 107.5 bcfd next week.
The average amount of gas flowing to the eight big US liquefied natural gas (LNG) export plants rose to 15.8 bcfd so far in July as liquefaction units at some plants slowly exited maintenance reductions and unexpected outages. That was up from 14.3 bcfd in June and 15 bcfd in May, but remained below the monthly record high of 16 bcfd in April.
On a daily basis, however, feedgas slid to a three-week low of 105.2 bcfd on Wednesday due to the shutdown of Kinder Morgan's 0.4-bcfd Elba Island in Georgia and the brief shutdown of one of the three liquefaction trains at Freeport LNG's 2.1-bcfd plant in Texas. Energy traders said gas flow data shows the train at Freeport, which shut on Tuesday, was probably back in service.
(Reporting by Scott DiSavino Editing by Tomasz Janowski and Ros Russell)
