US natgas prices drop 7% to 10-week low on Texas Freeport LNG outage
July 15 (Reuters) - U.S. natural gas futures fell about 7% to a 10-week low on Monday due to the slow return of the Freeport LNG export plant in Texas after shutting for Hurricane Beryl and on forecasts for less hot weather and lower demand over the next two weeks than previously expected.
Freeport said it is repairing damage sustained in the hurricane. The company said it anticipated it would restart the first train this week and the remaining two trains shortly thereafter.
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Traders also said prices were depressed by rising output and the tremendous oversupply of gas still in storage.
Analysts said there was currently about 18% more gas in storage than is normal for this time of year.
Front-month gas futures for August delivery on the New York Mercantile Exchange fell 17.1 cents, or 7.3%, to settle at $2.158 per million British thermal units (mmBtu), their lowest close since May 3.
That price drop also pushed the front-month back into technically oversold territory for the seventh time in the last nine days.
In other news, Saturday and Sunday were the hottest days so far this year and Monday and Tuesday were forecast to be even hotter, according to meteorologists.
That heat will likely force power generators to continue burning lots of gas to produce electricity to keep air conditioners humming. Power generators burned a record 54.1 billion cubic feet per day (bcfd) of gas on July 9, according to LSEG data.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.3 bcfd so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May.
U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
Several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March. But higher prices in April, May and June prompted some drillers, including EQT and Chesapeake Energy, to return to the well pad.
Meteorologists projected weather across the Lower 48 states would remain mostly hotter than normal through at least July 30, but for some near-normal days from July 18 to 22.
With less hot weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will slide from 106.3 bcfd to 103.8 bcfd next week. Those forecasts were lower than LSEG's outlook on Friday.
Gas flows to the seven big U.S. LNG export plants fell to 11.8 bcfd so far in July after Freeport LNG in Texas shut ahead of Hurricane Beryl on July 7, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
(Reporting by Scott DiSavino; Editing by Kirsten Donovan and Josie Kao)