U.S. Natural Gas Futures Jump to 8-Month High on Rising LNG Exports, Hot Weather

(Reuters) — U.S. natural gas futures jumped to an eight-month high on Tuesday on rising liquefied natural gas (LNG) exports, a decline in output and forecasts for warmer weather and higher air conditioning demand over the next two weeks than previously expected.

Front-month gas futures rose 7.8 cents, or 3.3%, to settle at $2.417 per million British thermal units, their highest close since Dec. 5.

Power prices in the U.S. West, meanwhile, soared to record highs for a second day during a brutal heat wave as California utilities urged consumers to keep conserving energy to avoid more rotating outages with demand expected to near an all-time high on Tuesday.

Next-day gas prices at the SoCal Citygate in Southern California, meanwhile, jumped to their highest since February 2019.

Although U.S. and European gas contracts mostly trade on their own fundamentals, a 59% jump in prices at the European Title Transfer Facility (TTF) benchmark in the Netherlands so far in

August helped pull U.S. gas up about 36% this month. That made it profitable for more U.S. LNG cargoes to go to Europe.

U.S. LNG exports were on track to rise in August for the first time in six months. Pipeline gas flowing to the plants climbed to a three-month high of 4.4 billion cubic feet per day (bcfd) so far this month from a 21-month low of 3.3 bcfd in July.

With temperatures expected to moderate now that the hottest days of summer are past, Refinitiv projected U.S. demand, including exports, will decline from an average of 89.9 bcfd this week to 88.8 bcfd next week. That is higher than Refinitiv's forecast on Monday.

On a daily basis, output is on track to fall to a one-month low of 87.2 bcfd due to planned work in the Rockies, according to preliminary data from Refinitiv.

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