HomeNewsU.S. natgas hits near 3-week high on output drop, hotter weather forecasts

U.S. natgas hits near 3-week high on output drop, hotter weather forecasts

8/12/2024

U.S. natural gas futures rose more than 1% to a near three-week high on Monday, supported by a drop in output in recent days and forecasts for hotter weather that should boost the amount of gas power generators burn to keep air conditioners humming.

Front-month gas futures for September delivery on the New York Mercantile Exchange rose $0.027, or about 1.3%, to $2.17/MMBtu. The session high was its highest since July 23.

"Drilling cutback announcements by major organizations, whether it be Chesapeake or EQT or whomever, everyone seems to be pulling back on their end-of-year production outlooks, and that's definitely giving us support," said Gary Cunningham, director of market research at Tradition Energy.

The market is also getting some boost from "weather shifts, which are showing some heat towards the end of August and into early September" and some European buyers come back into the U.S. market for hedging purposes, Cunningham added.

Major U.S. natural gas producers were preparing to further curtail production in the second half, after prices sank nearly 40% over the past two months.

Financial firm LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 102.8 Bft3d so far in August, down from 103.4 Bft3d in July. That compares with a monthly record high of 105.5 Bft3d in December 2023.

Meanwhile, LSEG estimated 228 cooling degree days (CDDs) over the next two weeks. The normal for this time of year is 183 CDDs. LSEG forecast average gas demand in the Lower 48 states, including exports, to rise to 105.9 Bft3d this week from 104.0 Bft3d last week, and then expected to rise to 107.9 Bft3d next week.

Dutch wholesale gas prices inched up on Monday morning amid concerns about gas supplies via Ukraine, while British prices rose due to outages in the UK Continental Shelf.

 

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