U.S. natural gas futures eased on Tuesday from a 31-month high in the prior session on forecasts for less hot weather and a drop in demand for air conditioning next week.
On its second to last day as the front-month, gas futures NGc1 for August delivery fell 3 cents, or 0.7%, to $4.072 per million British thermal units (mmBtu) at 8:25 a.m. EDT (1225 GMT). On Monday, the contract closed at its highest since December 2018 for a sixth day in a row.
The September NGU21 contract, which will soon be the front-month, was down 3 cents to around $4.05 per mmBtu.
In the power market, meanwhile, the Texas power grid passed the first of what could be many tests over the next week by meeting very high demand on Monday without problem as homes and businesses crank up their air conditioners to escape the latest heatwave.
Data provider Refinitiv said U.S. gas output in the Lower 48 states slipped to 91.5 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia earlier in the month. That compares with an average of 92.2 bcfd in June and an all-time high of 95.4 bcfd in November 2019.
Refinitiv projected average gas demand, including exports, would slip from 95.4 bcfd this week to 92.8 next week. The forecast for next week was lower than Refinitiv's projections on Monday on expectations for less heat and air conditioning demand.
The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants averaged 10.8 bcfd so far in July, up from 10.1 bcfd in June but still below April's 11.5-bcfd record.
With European and Asian gas trading over $12 and $14 per mmBtu, respectively, analysts said buyers around the world would keep purchasing all the LNG the United States can produce.
U.S. pipeline exports to Mexico have averaged 6.5 bcfd so far in July, down from a record 6.8 bcfd in June.
(Reporting by Scott DiSavino; Editing by Anil D'Silva) ((firstname.lastname@example.org; +1 332 219 1922; Reuters Messaging: email@example.com))