US natgas prices hold near 2-week high as hot weather boosts power demand

By Scott DiSavino

July 17 (Reuters) - U.S. natural gas futures held near a two-week high on Thursday as hot weather forced power generators to burn lots of gas to keep air conditioners humming.

Front-month gas futures for August delivery NGc1 on the New York Mercantile Exchange fell 0.9 cents, or 0.3%, to settle at $3.542 per million British thermal units. On Wednesday, the contract closed at its highest since June 27 for a second day in a row.

A federal storage report showed an expected build that was bigger than usual for this time of year due to near-record production.

The U.S. Energy Information Administration (EIA) said energy firms added 46 billion cubic feet of gas into storage during the week ended July 11.

That was in line with the 46-bcf build analysts forecast in a Reuters poll and compares with an increase of 18 bcf during the same week last year and an average of 41 bcf over the 2020-2024 period. EIA/GAS NGAS/POLL

The build left gas stockpiles around 6% above the five-year normal for this time of year.

The U.S. National Hurricane Center on Thursday downgraded the chance that a tropical system off the coast of Louisiana and Mississippi would strengthen into a tropical cyclone over the next week to just 10%, from a 40% chance on Wednesday.

Analysts said that while tropical storms in the Gulf can knock some gas production out of service, storms were more likely to destroy demand by reducing the amount of gas power generators burn by leaving millions of homes and businesses without electricity, while also cutting gas exports by shutting Gulf Coast LNG export plants.

Meteorologists forecast the weather in the Lower 48 U.S. states would mostly remain hotter than normal through at least August 1, with the hottest days of the summer expected next week.

Temperatures across the country will average around 81 degrees Fahrenheit (27.2 degrees Celsius) on July 24, on track to top this summer's current hottest day of 80 F on June 24 but still below the daily average record high of 83 F on July 20, 2022, according to data from financial firm LSEG going back to 2018.

SUPPLY AND DEMAND

LSEG said average gas output in the Lower 48 rose to 107.0 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.

LSEG forecast average gas demand in the Lower 48, including exports, would slide from 110.0 bcfd this week to 107.5 bcfd next week.

The average amount of gas flowing to the eight big U.S. liquefied natural gas (LNG) export plants rose to 15.8 bcfd so far in July as liquefaction units at some plants slowly exited 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.

On a daily basis, feedgas slid to a three-week low of 105.2 bcfd on Wednesday due to the shutdown of Kinder Morgan's KMI.N 0.4-bcfd Elba Island in Georgia and the brief shutdown of one of the three liquefaction trains at Freeport LNG's 2.1-bcfd plant in Texas. Energy traders said gas flow data shows the train at Freeport, which shut on Tuesday, was probably back in service.

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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