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Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 3.
Temperatures are expected to be above normal starting July across more parts of U.S., compared with last year “when the heat was concentrated in just Texas or currently where the heat is concentrated in just the Northeast and that’s when we start to think about true gas demands accelerating – well above last year,” said Gary Cunningham, director of market research at Tradition Energy.
Front-month gas futures for July delivery on the New York Mercantile Exchange rose 12.1 cents, or 4.3%, to settle at $2.909 per million British thermal units (MMBtu).
The contract shed over 4% in the previous session, to hit the lowest in one-and-a-half weeks on forecasts for a steeper than previously expected rise in gas supply this week, and slight replacement from coal-energy in the U.S. energy mix.
Meanwhile, traders also assessed the impact from potential tropical cyclone One, which is expected to become a tropical storm as it reaches the western Gulf Coast late on Wednesday, and could lead to lower demand for gas as temperatures drop across Texas.
“If that storm tracks even just slightly more northward, it can have more of an impact on the LNG export terminals,” said Cunningham.
Gas prices rallied about 22% in the first 11 days of June to hit a 21-week high of $3.159/MMBtu on June 11, before shedding roughly 30 cents on the back of lower demand and higher gas output, some of which resulted from the Mountain Valley pipeline coming in service.
“We see the market lifting back up to the $3.22 highs that were established a week ago and where we will be looking to accept profits in anticipation of a renewed swing south back toward the $2.80 level,” energy advisory Ritterbusch and Associates said in a note.
Meanwhile, European gas prices ticked up as warmer weather is set to lift power demand for cooling and competition increases for liquefied natural gas supplies.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states had fallen to an average of 96.9 billion cubic feet per day (bcfd) so far in June from 98.1 bcfd in May. That compares with a monthly record of 105.5 bcfd in December 2023.
Forecast for total U.S. supply for the ongoing week were raised from 106.1 bcfd on Monday to 106.3 bcfd on Tuesday.
LSEG forecast that heat would boost gas demand in the Lower 48, including exports, from 96.5 bcfd this week to 102.4 bcfd next week. The forecasts for the next week were slightly higher than LSEG’s outlook on Monday.
Gas flows to the seven big U.S. LNG export plants, meanwhile, were at 12.9 bcfd so far in June, the same as the 12.9 bcfd in May.
That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing plant and pipeline maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy’s Sabine Pass, Venture Global’s Calcasieu Pass.
(Reporting by Daksh Grover and Harshit Verma in Bengaluru; Editing by Alison Williams Editing by Marguerita Choy)
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