U.S. natural gas futures rise as heat wave lingers

(Reuters) - U.S. natural gas futures rose on Monday as hotter-than-normal weather kept cooling demand high, with consumption set to rise further into next week.

Supply was also seen dropping to 108.6 billion cubic feet per day (bcfd) from 109.2 bcfd in the previous week.

Front-month gas futures for September delivery on the New York Mercantile Exchange were up 2.6 cents, or about 1%, to $2.80 per million British thermal units (mmBtu) at 09:37 a.m. EDT (1337 GMT).   

Texas is going to see a substantial increase in natural gas consumption this week because wind generation has fallen, said Price Futures Group analyst Phil Flynn.

Power demand in Texas hit an all-time high three times last week and will likely break that record again this week, the state's power grid operator said. Texas gets most of its electricity from gas-fired plants.

Meteorologists forecast weather in the lower 48 states to remain hotter than normal through at least Aug. 29.

Dutch and British wholesale gas prices also rose as markets await clarity on whether strikes at Australia liquefied natural gas (LNG) facilities will go ahead.

"The possibility of Australian labor strikes affecting LNG exports out of the country still exists as an item capable of spiking European pricing with spillover into the US market," analysts at Ritterbusch and Associates said in a note.

Data provider Refinitiv forecast U.S. gas demand, including exports, would rise from 104.3 billion cubic feet per day (bcfd) this week to 106.0 bcfd next week.

Refinitiv said average gas output in the lower 48 states was 101.9 bcfd so far in August, nearly the same as the 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May.

Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 bcfd in July to 12.4 bcfd so far in August, mainly due to reductions at Venture Global LNG's Calcasieu facility in Louisiana. That compares with a monthly record of 14.0 bcfd in April.

The U.S. is on track to become the world's biggest LNG supplier in 2023 - ahead of recent leaders Australia and Qatar – as higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to the war in Ukraine.

In 2022, roughly 69%, or 7.2 bcfd, of U.S. LNG exports went to Europe as shippers diverted cargoes from Asia to get higher prices. In 2021, when prices in Asia were higher, just 35%, or about 3.3 bcfd, of U.S. LNG exports went to Europe.

With the return of higher gas prices in Asia this year, analysts said they expect U.S. LNG exports to Asia will increase. Just 19%, or 2.1 bcfd, of U.S. LNG exports went to Asia during the first half of 2023, while 70%, or 8.0 bcfd, went to Europe.

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