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U.S. natgas prices hit 3-week low on weak LNG exports, energy futures drop


These translations are done via Google Translate

U.S. natural gas futures eased about 1% to a three-week low on Wednesday as the amount of gas flowing to liquefied natural gas (LNG) export plants remained low due to maintenance outages and a bigger 2% drop in oil futures spurred by grim manufacturing data.

Gas futures fell despite forecasts for hotter weather and higher gas demand over the next two weeks than previously expected as a heat wave moves slowly across the central U.S.

That heat wave is expected to boost power demand to record highs in the 15-state Midcontinent Independent System Operator (MISO) territory extending from Minnesota to Louisiana on Thursday and the Electric Reliability Council of Texas (ERCOT) grid in Texas on Friday as homes and businesses cranked up air conditioners.

In the MISO region, the grid operator projected it may be forced to use some power held in reserve to meet demand plus required reserves at the peak hour on Thursday. Traders noted that grids usually call for consumers to conserve energy when available supplies don’t meet demand plus reserve requirements.

MISO projected demand would reach a record 128,222 megawatts (MW) on Thursday. To meet that load plus 2,410 MW of required reserves, or 130,632 MW, the grid said it expected to have about 130,267 MW of resources available with 125,130 MW from supplies within MISO and 5,137 MW of imports. MISO’s current all-time high is 127,100 MW set in July 2011.

Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.

Front-month gas futures for September delivery on the New York Mercantile Exchange were down 2.4 cents, or 0.9%, to $2.536 per million British thermal units (mmBtu) at 9:59 a.m. EDT (1359 GMT), putting the contract on track for its lowest close since Aug. 2.

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The heat wave moving across the central U.S. helped boost spot or next-day gas prices for Tuesday and Wednesday over futures for only the third and fourth time since late April. Energy traders said those higher spot prices were limiting the decline in September futures. Next-day gas at the Henry Hub benchmark in Louisiana sold for $2.60 per mmBtu for Tuesday and $2.58 for Wednesday.

SUPPLY AND DEMAND

Data provider Refinitiv said average gas output in the U.S. Lower 48 states had eased to 101.6 billion cubic feet per day (bcfd) so far in August from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May.

Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Sept. 7.

Refinitiv forecast U.S. gas demand, including exports, would rise from 103.9 bcfd this week to 104.7 bcfd next week. Those forecasts were higher than Refinitiv’s outlook on Tuesday.

Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 bcfd in July to 12.3 bcfd so far in August due mostly to reductions at Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas. That compares with a monthly record of 14.0 bcfd in April.

(Reporting by Scott DiSavino; Editing by Paul Simao)



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