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US Natural Gas Update: Prices Rise on Reduced Production

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US natural gas futures rose in midday trade on Tuesday on lower domestic production and a sustained recovery in LNG feedgas demand.

The front-month Henry Hub contract and the continuous natural gas benchmark both rose 3.05% to $3.242 per million British thermal units.

Aegis Hedging said production softened in morning pipeline nominations, falling by almost 2 billion cubic feet per day to 108.8 Bcf/d, the lowest level in two weeks.

The decline was largely attributed to scheduled maintenance across the Northeast, Midwest, and South Central regions.

On the demand side, NatGasWeather.com said national consumption is expected to remain light over the next nine days as comfortable temperatures persist across much of the northern US, with highs in the 70s to 80s degrees Fahrenheit.

However, NatGasWeather.com forecasts hotter conditions in the 90s to 100s degrees Fahrenheit across parts of the West and South, which are expected to support stronger regional demand. Looking ahead, demand is projected to strengthen over the next 10-15 days as temperatures soar across the interior US.

NRG Energy said total US natural gas demand is forecast to decline by 1.8 Bcf/d on Tuesday across the Lower 48, driven by below-normal temperatures in parts of the South and Northeast.

Power burn is expected to fall by 2 Bcf/d, while industrial demand is steady at 22 Bcf/d, NRG data show. Residential and commercial demand is projected to edge up slightly by 0.1 Bcf/d.

On the export side, LNG feedgas flows continue to recover, with exports rising 0.4 Bcf/d overnight to 18.4 Bcf/d, up from 16.8 Bcf/d on June 10, according to NRG Energy.

Aegis Hedging also noted that Cheniere Energy (LNG) has reaffirmed its timeline for Train 7 at its Corpus Christi LNG facility. Train 6 began producing LNG on May 12, while the final liquefaction unit under the Stage 3 expansion remains on track for completion this fall, it said.

In global markets, natural gas prices in Europe and Asia have eased since the weekend amid signs of diplomatic progress between the US and Iran.

A memorandum of understanding is expected to be signed in Switzerland on June 19, though details remain unconfirmed and uncertainty persists around the timing of any reopening of the Strait of Hormuz.

Price: $230.24, Change: $-5.01, Percent Change: -2.13%

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