U.S. natgas futures little changed on steady weather, demand forecasts

U.S. natural gas futures traded within a few cents of unchanged on Tuesday on forecasts calling for similar weather and demand over the next two weeks as in the previous session.

Front-month gas futures rose 0.5 cents, or 0.3%, to $1.674 per million British thermal units at 7:49 a.m. EDT (1149 GMT). On Monday, the contract settled at its lowest since May 15.

Refinitiv said production in the Lower 48 U.S. states averages just 87.5 billion cubic feet per day in June, down from a 16-month low of 88.2 bcfd in May and an all-time monthly high of 95.4 bcfd in November.

With warmer weather coming, Refinitiv forecast U.S. demand, including exports, would rise from 77.4 bcfd this week to 85.1 bcfd next week. That is similar to Refinitiv’s outlook on Monday.

The amount of pipeline gas flowing to U.S. LNG export plants averaged just 4.1 bcfd (42% utilization) in June, down from an eight-month low of 6.4 bcfd in May and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019.

U.S. liquefied natural gas exports dropped in recent months after buyers canceled dozens of cargoes for the summer in April and May when U.S. gas mostly traded higher than in Europe due to demand destruction from the coronavirus and record-high European stockpiles, among other things.

U.S. pipeline exports, meanwhile, are rising as North American consumers crank up their air conditioners.

Refinitiv said pipeline exports to Canada averaged 2.3 bcfd in June, up from a seven-month low of 2.2 bcfd in May but still well below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.2 bcfd this month, up from 4.8 bcfd in May but shy of a record 5.6 bcfd in March.