On Wednesday, natural gas prices surged on a preliminary drop in daily output and expectations for hotter weather over the next two weeks.
NGAS futures edged up 3.42% or 0.23 points to $6.80 per metric million British thermal units (MMBtu).
Accordingly, the average natural gas production in the US Lower 48 states skidded to 95.10 billion cubic feet per day in June. The latest report was smaller than the 95.20 bcfd in May. In line with this, the output remained below the monthly record of 96.10 bcfd in December 2021.
On a daily basis, the yield was on track to slash 1.80 bcfd. This drop would lead to a preliminary two-week low of 94.30 bcfd, marking the biggest fall since early February.
Another bullish factor is the anticipated warmer temperatures. This environmental condition will prompt power generators to burn more gas to cool homes and businesses. Analysts projected the average US NGAS demand, including exports to rise from 94.00 bcfd this week. Then, it would eventually increase to 95.90 bcfd next week.
Correspondingly, the upside of natural gas came on the last day of trade for the July futures contract. The current trading is often a volatile day since the volume is extremely low.
Natural Gas prices sees bullish pattern in July
Moreover, experts anticipated the natural gas contracts to develop a bullish pattern for the first weeks of July. The projection came from the latest runs of the American and European weather models, showing notably hotter trends day/day.
However, Freeport, the second-biggest US LNG export plant, consumed about two bcfd of gas before closing. Thus, the 90-day outage would leave 180.00 billion cubic feet of gas available to the market, capping NGAS’ gains.
Correspondingly, experts anticipated the US utilities to rebuild low gas stockpiles ahead of winter quickly. This move will reduce the amount of American natural gas available to the rest of the world.