US Natural Gas Update: Futures Slip as Milder Weather, Weak LNG Demand Weigh on Prices
US natural gas futures moved slightly lower in midday trading Tuesday as moderating weather forecasts, weaker LNG feedgas demand, and potential disruptions from a tropical storm weighed on market sentiment.The front-month Henry Hub contract and the continuous natural gas futures contract each declined 0.10% to $2.856 per million British thermal units.NatGasWeather.com on Tuesday said it projects US gas demand to be "moderate-high" over the next five days before rising to "high" levels in the following week.The forecaster said much of the country is expected to experience above-normal temperatures, with highs reaching the upper 80s to 100s degrees Fahrenheit and some locations potentially seeing temperatures in the 110s.Cooler conditions are expected across parts of the Midwest, Great Lakes, and Northeast as weather systems bring showers, thunderstorms, and highs in the 70s and 80s degrees Fahrenheit.Demand is then expected to strengthen during the 7-15 day outlook as much of the country remains warmer than normal.Meanwhile, Aegis Hedging said a tropical depression was upgraded to Tropical Storm Bertha and is forecast to move westward along the US Gulf Coast. However, the National Weather Service warned Tuesday that the storm's projected path and intensity remain "highly uncertain."Aegis said Bertha is unlikely to significantly affect natural gas supply infrastructure but could pose risks to LNG shipping activity and create a modest downside risk to cooling demand across the US South.Domestic consumption has also begun to soften as milder temperatures settle across the eastern half of the country, according to NRG Energy.Over the past week, US natural gas demand ranged between 113 billion cubic feet per day and 105 Bcf/d, with a notable decline heading into the weekend.Additional pressure came from rising renewable power generation. Trading Economics reported that US solar and wind output reached near-record levels in July, reducing the share of electricity generation supplied by gas-fired power plants.Despite softer demand trends, production has continued to climb. Average natural gas output in the Lower 48 states increased to 110.5 Bcf/d so far in July, up from 110 Bcf/d in June, according to Trading Economics, adding to the perception of the market as oversupplied.LNG export demand remains a bearish factor for the market following Freeport LNG's announcement of extended maintenance from July 10 through the end of August. The outage is expected to reduce LNG feedgas demand by roughly 1 Bcf/d, NRG said.However, longer-term export growth received a boost after Cheniere Energy's (LNG) Corpus Christi Stage III Train 7 received a key regulatory approval, allowing LNG production to begin in mid-August.The final liquefaction train is expected to be completed by mid-September, bringing the Stage III expansion project to completion.Price: $262.91, Change: $-2.04, Percent Change: -0.77%