a day ago
- Business
- Business Recorder
US natural gas falls on hot weather forecasts
NEW YORK: US natural gas futures slipped on Friday but headed for its best week in more than a month, steered by forecasts for hotter weather that should boost the amount of gas power generators burn to keep air conditioners humming.
Gas futures for July delivery on the New York Mercantile Exchange fell 3.6%, to settle at $3.85 per million British thermal units (mmBtu), after hitting its highest level since April earlier in the session at $4.148. Prices were up about 7.9% for the week.
'It's hot hot hot. Not only are temperatures heating up in the United States with a major heat wave, the tensions between Israel and Iran are still hot,' said Phil Flynn, an analyst at Price Futures Group.
'With temperatures expected to reach triple digits in major cities from Chicago to the East Coast could lead to a record-breaking demand for natural gas as air conditioners will be humming.'
On the geopolitical front, a week into its campaign, Israel said it had struck dozens of military targets overnight, including missile production sites, a research body involved in nuclear weapons development in Tehran and military facilities in western and central Iran.
The Iran-Israel conflict has intensified supply concerns in the global gas market, fueled by fears over the secure passage of LNG cargo through the Strait of Hormuz. The Strait of Hormuz is one of the most strategically significant chokepoints in the global energy supply chain.
Financial firm LSEG said average gas output in the Lower 48 US states stood at 105.3 billion cubic feet per day so far in June, which remains below the monthly record high of 106.3 bcfd in March due primarily to normal spring maintenance earlier in the month.
On Wednesday, the US Energy Information Administration said energy firms pulled 95 billion cubic feet (bcf) of gas from storage during the week ended June 13. That was a little smaller than the 98-bcf build analysts forecast in a Reuters poll and compared with an increase of 72 bcf during the same week last year and a five-year (2020-2024) average of 72 bcf for this time of year.
'How long the price increase will continue depends on the realization of the heat and how long the heat will continue and how it will take a toll on the storage,' said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.
'If the summer weather turns out to be normal, we may end up with a record storage level at the end of the injection season, which will put a cap on prices,' he added.
Meanwhile, Freeport LNG has requested a 40-month extension from federal regulators to complete the long-delayed Train 4 expansion at its Texas export facility, aiming to bring the project online by December 1, 2031, according to a filing.
