Texas markets

U.S. native gas futures surge – Markets

NEW YORK: U.S. natural gas futures jumped about 5% to a five-week high on Friday on forecasts of warmer-than-expected weather and higher demand next week and continuing problems with a turbine needed to increase production on the Russia-Germany Nord Stream gas pipe.

Extreme heat has already spiked U.S. electricity demand several times this summer in several regions, including Texas, as homes and businesses turn on air conditioners to escape the heat.

Power companies were burning a lot of gas to produce all that electricity, in part because coal prices were near record highs, making it uneconomical for many generators to switch to coal-fired plants.

The gas price increase came despite the continued outage of the liquefied natural gas (LNG) export plant in Freeport, Texas, which left more gas in the United States for utilities to inject into more low stocks.

Freeport, the second-largest LNG export plant in the United States, was consuming about 2 billion cubic feet per day (bcfd) of gas before it closed on June 8. Freeport LNG estimated that the facility would return to partial service in October. Some analysts expect the outage to last longer.

First-month gas futures rose 40.9 cents, or 5.2%, to $8.341 per million British thermal units (mmBtu), putting the contract on track for its close the next month. higher since June 13.

For the week, the contract rose around 18%, putting it on track for a third week of gains after rising 16% last week and 5% two weeks ago. This week’s increase would be its biggest weekly percentage gain since August 2020, when it climbed 24%.

So far this year, gas’s first month is up 121% as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since the invasion of Ukraine. by Russia.

Gas was trading around $49 per mmBtu in Europe and $38 in Asia.

Russian gas exports on the three main lines to Germany – Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route jumped to 3.7 billion cubic feet per day Thursday from around 1.4 bcfd over the past 10 days while Nord Stream was closed for maintenance.

This was the same as the average of 3.7 billion cubic feet per day in the month before Nord Stream closed, but was still well below the average of 9.4 billion cubic feet per day in July 2021.

Gas flows on Nord Stream, however, may not increase much in the near future, as a turbine that Russia has said is needed to boost production is stuck in transit in Germany, as Moscow hasn’t until ‘now not given the go-ahead to bring him back.

US gas futures are lagging far behind world prices as the US is the world’s largest producer, with all the fuel it needs for domestic use, while capacity constraints limit LNG exports.

Data provider Refinitiv said average gas production in the lower 48 U.S. states rose to 96.1 billion cubic feet per day in July from 95.3 billion cubic feet per day in June. This compares to a monthly high of 96.1 bcfd in December 2021.

Refinitiv forecast average U.S. gas demand, including exports, to rise from 101.1 billion cubic feet per day this week to 100.6 billion cubic feet per day next week and 99.9 billion cubic feet per day in two weeks, as extreme heat begins to subside in parts of the country. The forecast for next week was higher than Refinitiv’s outlook on Thursday.

The average amount of gas delivered to LNG export plants in the United States rose to 11.0 billion cubic feet per day in July, from 11.2 billion cubic feet per day in June, due to reductions at Cheniere Energy Inc’s Sabine Pass and Venture Global LNG’s Calcasieu Pass plants in Louisiana this week.