US natgas prices hold near one-week low on rising output, lower demand forecasts

By Scott DiSavino

July 7 (Reuters) - U.S. natural gas futures held near a one-week low on Monday on an increase in output so far this month and forecasts for less demand this week than previously expected.

That should allow utilities to keep adding more gas to storage than usual for this time of year despite hotter-than-normal weather so far this summer.

Front-month gas futures for August delivery NGc1 on the New York Mercantile Exchange (NYMEX) rose 0.3 cents, or 0.1%, to settle at $3.412 per million British thermal units (mmBtu). On Thursday before the long U.S. July Fourth holiday weekend, the contract closed at its lowest since June 26.

Total gas futures volume traded on the NYMEX NG-TOT on July 2 was just 315,668 contracts, the lowest since April 2024.

One factor weighing on futures prices over the past few months has been low cash prices. Next-day gas at the U.S. Henry Hub benchmark NG-W-HH-SNL in Louisiana traded around $3.24 per mmBtu, keeping spot contracts below front-month futures every day since late April.

Analysts have said that so long as spot prices remain far enough below front-month futures NGc1 to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.

Another factor weighing on futures prices in recent months has been the growing surplus of gas in storage over the five-year normal for this time of year. Analysts projected energy firms added more gas into storage than usual for an 11th time in 12 weeks during the week ended July 4. EIA/GAS NGAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 107.0 billion cubic feet per day (bcfd) so far in July, up from a monthly record of 106.4 bcfd in June.

Meteorologists forecast weather across the Lower 48 states will remain mostly warmer than normal through at least July 22.

With hotter weather expected, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 105.9 bcfd this week to 107.5 bcfd next week. The forecast for this week was lower than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 15.5 bcfd so far in July as liquefaction units at some plants slowly exit maintenance reductions and unexpected outages. That was up from 14.3 bcfd in June and 15.0 bcfd in May, but remained below the monthly record high of 16.0 bcfd in April.

The U.S. became the world's biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.

Gas was trading around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and $13 at the Japan Korea Marker (JMM) JKMc1 benchmark in Asia. NG/EU

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

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C