US natgas prices climb 3% to 10-week high on soaring oil prices, rising gas demand forecasts

By Scott DiSavino

June 17 (Reuters) - U.S. natural gas futures climbed about 3% to a 10-week high as gas followed oil prices higher on worries of possible disruptions of Middle East oil and gas supplies, and expectations U.S. gas demand will jump in July as flows to both liquefied natural gas (LNG) export plants and power generators increase.

U.S. crude futures CLc1 jumped over 4% on Tuesday as the Iran-Israel conflict raged with no end in sight. O/R

In the U.S., analysts forecast several LNG export plants would start pulling in more gas in late June as they exit maintenance reductions.

Meteorologists, meanwhile, forecast the weather in the U.S. would remain hotter than normal through at least 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 10.3 cents, or 2.7%, to settle at $3.851 per million British thermal units (mmBtu), their highest close since April 3.

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

The average estimate of most analysts, however, was that energy firms added 98 billion cubic feet (bcf) of gas into storage, which is still much bigger than the 72-bcf normal for this time of year.

During the prior week ended June 6, energy firms added 100 bcf 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.

For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal

For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

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