US natgas prices edge up to 5-week high on rising LNG, power demand forecasts

By Scott DiSavino

June 17 (Reuters) - U.S. natural gas futures edged up about 1% to a five-week high on expectations demand for the fuel will soar in July as flows to both liquefied natural gas export plants and power generators increase.

Units at several LNG export plants were shut for maintenance outages expected to last until later in June. Analysts said the LNG plants will consume more gas as those units return to service in coming weeks.

The weather, meanwhile, is forecast to remain hotter than normal through early July, which should boost the amount of gas electric generators burn to keep air conditioners humming.

Gas futures for July delivery NGc1 on the New York Mercantile Exchange rose 3.3 cents, or 0.9%, to $3.781 per million British thermal units (mmBtu), putting the contract on track for its highest close since May 9.

Prices rose despite forecasts for lower demand over the next two weeks than previously expected and analysts forecasts that energy firms set another storage record with an eighth triple-digit injection during the week ended June 13.

During the prior week ended June 6, energy firms added 100 billion cubic feet or more of gas into storage for a seventh week in a row, tying the seven-week triple-digit injection record set in June 2014, according to federal energy data going back to 2010.

So far this year, energy firms have pulled a monthly record high of 1.013 trillion cubic feet of gas out of storage in January when brutally cold weather boosted heating demand and added a monthly record high of 497 bcf into storage in May when mild weather kept both heating and cooling use low, according to federal energy data. The prior all-time monthly injection high was 494 bcf in May 2015.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states edged up to 105.3 billion cubic feet per day so far in June, up from 105.2 bcfd in May. That remained below the monthly record high of 106.3 bcfd in March due primarily to normal spring maintenance earlier in the month.

On a daily basis, output rose to an eight-week high of 106.4 bcfd on Monday. That compares with an all-time daily high of 107.5 bcfd on April 18.

Meteorologists forecast weather across the Lower 48 states will remain mostly warmer than normal through at least July 2.

With hotter summer weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 98.8 bcfd this week to 102.0 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.

The average amount of gas flowing to the eight big U.S. LNG export plants fell to 14.1 bcfd so far in June, down from 15.0 bcfd in May and a monthly record high of 16.0 bcfd in April.

Traders said LNG feedgas reductions since April were primarily due to normal spring maintenance, including work at Cameron LNG's 2.0-bcfd plant in Louisiana and Cheniere Energy's LNG.N 4.5-bcfd Sabine Pass facility in Louisiana and 3.9-bcfd Corpus Christi plant in Texas, and short, unplanned unit outages at Freeport LNG's 2.1-bcfd plant in Texas on May 6, May 23, May 28 and June 3.