US natural gas trades near 11-week low as mild weather cools demand
By CHRISTINE BUURMA
Bloomberg
US natural gas futures traded near an 11-week low on forecasts for cooler weather that would limit power demand in the last weeks of summer.
Temperatures may be mostly average or below normal in the lower 48 states through Aug. 28, according to Commodity Weather Group in Bethesda, Maryland. The high in Chicago on Aug. 26 may be 72 degrees Fahrenheit (22 Celsius), 9 less than usual, AccuWeather data shows.
“It’s definitely cooler in the Midwest,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “The air conditioners that have been humming all summer are getting a little bit of a break.”
Natural gas for September delivery rose 0.1 cent to $2.677/MMBtu at 9:58 a.m. on the New York Mercantile Exchange after slipping to $2.624, the lowest intraday price since June 8. Volume for all futures traded was 16% above the 100-day average.
The high in Cleveland on Aug. 26 may be 70 degrees Fahrenheit, 8 less than average, AccuWeather data shows. Power plants account for about 33% of gas demand.
Gas stockpiles totaled 3.03 trillion cubic feet as of Aug. 14. By the end of the injection season on Oct. 31, supplies may total 3.867 trillion cubic feet, 1.8% above the five-year average, according to the US Energy Information Administration (EIA).
Gas Output
Marketed gas production in the US may climb 5.4% this year to a record 78.72 billion cubic feet/day, the EIA said Aug. 11 in its monthly Short-Term Energy Outlook. The agency cut its forecast for the average 2015 price at the benchmark Henry Hub in Erath, Louisiana, to $2.89/MMBtu from $2.97 in last month’s report.
The gap between US and international prices for liquefied natural gas (LNG) has narrowed with oil’s collapse, reducing the competitive advantage for US export projects, Bank of America Corp. said in a note to clients Monday.
Prices at the Henry Hub in Louisiana, the benchmark for US gas, would need to trade below $2/MMBtu “to be attractive for new European long-term contract buyers,” Max Denery, an analyst at the bank in New York, said in the report. Henry Hub gas would have to drop below $2.20 for US LNG to win long-term Asian purchasers, Denery said.
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