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U.S. Natgas Prices Edge up to 2-Week High on Lower Output, Higher Demand


These translations are done via Google Translate
U.S. natural gas futures edged up about 1% to a two-week high on Friday on recent declines in daily output and forecasts power generators will burn a lot more gas in late June to meet rising electric use as homes and businesses crank up their air conditioners to escape an expected coming heat wave.

Traders said that price increase, which puts the contract within a penny of a 20-week high, was being held in check by lower spot prices and the tremendous oversupply of gas still in storage. Analysts said current gas stockpiles were around 24% above normal levels for this time of year.

Front-month gas futures for July delivery on the New York Mercantile Exchange rose 1.9 cents, or 0.7%, to $2.840 per million British thermal units (mmBtu), putting the contract on track for its highest close since May 22 for a third day in a row and close to topping what would be a 20-week high of $2.842.

For the week, the front-month was up about 10% after gaining about 3% last week.

One factor helping to keep a lid on futures prices so far this year has been lower spot or next-day prices at the Henry Hub benchmark in Louisiana.

The spot market has traded below front-month futures for 93 out of 109 trading days so far this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub were up about 1% to $2.30 per mmBtu for Friday.

Analysts have noted that so long as spot prices remain far enough below front-month futures to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states slipped to an average of 98.0 billion cubic feet per day (bcfd) so far in June, down from 98.1 bcfd in May. That compares with a monthly record of 105.5 bcfd in December 2023.

On a daily basis, however, output was on track to drop by about 2.1 bcfd over the past four days to a preliminary four-week low of 96.9 bcfd on Friday. That output, however, was up about 0.3 bcfd from a 15-week low of 96.5 bcfd on May 1.

Analysts said the increase since May 1 was a sign output was rising due to a 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24.

Overall, U.S. gas production is still down around 9% so far in 2024 after several energy firms, including EQT and Chesapeake Energy, delayed well completions and cut drilling activities when prices fell in February and March.

EQT is the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy.

Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 22 except for some near- to below-normal days from June 9-12.

LSEG forecast gas demand in the Lower 48, including exports, would ease from 93.7 bcfd this week to 93.1 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.

Gas flows to the seven big U.S. LNG export plants have risen to 13.3 bcfd so far in June, up from 12.9 bcfd in May.

That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing maintenance at several plants, including Cheniere Energy’s Sabine Pass and Venture Global’s Calcasieu Pass in Louisiana.



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