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US Natural Gas Futures: Futures Rise on Cooling, LNG Demand

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US natural gas futures rose in midday trading Friday, supported by forecasts for strong cooling demand and firm uptake from LNG export facilities.

The front-month Henry Hub contract and the continuous contract were both up 1.48% at $2.956 per million British thermal units.

Aegis Heding said the average Lower 48 temperature is expected to briefly approach the 10-year normal this weekend before rising toward 80 degrees Fahrenheit next week as a broad heat wave develops. The warmer outlook is lifting expectations for power demand, with cooling degree days now forecast to exceed 10 on most days during the forecast period, it said, citing data from Criterion.

Strong cooling demand has lifted natural gas consumption in the power sector. Celsius Energy estimated power burn at 47.5 billion cubic feet on Sept. 3, up 0.2 Bcf from the previous day and 3.6 Bcf above the same day a year earlier. For the week ended Thursday, power-sector gas demand averaged 49.5 Bcf per day, up 4.1 Bcf/d from the comparable period last year.

Firm demand from LNG export facilities also provided support. Gelber & Associates said LNG feedgas flows were nearing a two-week high at 19.5 Bcf/d. It said that Corpus Christi Stage 3, operating at commercial rates, also raised the potential ceiling for winter LNG feedgas demand.

The combination of strong demand for power and LNG exports is also prompting analysts to lower expectations for end-of-season gas inventories. Aegis Hedging said the consensus estimate for storage at the end of the injection season has moved closer to 3.9 trillion cubic feet, down from about 4.03 Tcf two weeks ago, as elevated temperatures in August and September boost demand.

The latest weekly storage report showed US utilities injected 30 Bcf of natural gas into storage in the week ended Aug. 28, the largest weekly build in three weeks, according to the US Energy Information Administration.

Working gas in storage stood at 3,214 Bcf, down 50 Bcf, or 1.8%, from the same period last year, but 160 Bcf, or 5.2%, above the five-year average, the EIA said.

Production remains strong and is helping keep the market well supplied and therefore keeps a cap on prices. Gelber estimated US dry gas production at 111.7 Bcf/d on Friday.

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