U.S. natural gas rallied as much as 10% to a two-week high on Monday following forecasts for hotter than usual weather to continue across much of the country, including in Texas where the ERCOT grid operator asked consumers to conserve energy.
Nymex natural gas (NG1:COM) for August delivery recently traded +9% at $6.578/MMBtu; ETFs: (NYSEARCA:UNG), (UGAZF), (DGAZ), (BOIL), (FCG), (KOLD), (UNL)
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The gains come despite an increase in U.S. production to record highs and forecasts for lower gas demand over the next two weeks than previously expected.
Meanwhile, the Freeport LNG export plant in Texas remains out of service; the second-biggest U.S. LNG export plant was consuming ~2B cf/day of gas before it shut on June 8 because of a fire.
Freeport LNG has said the facility could return to service by October, but some analysts believe the plant could remain shut longer.
The front-month U.S. natural gas contract has gained ~80% YTD as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia’s invasion of Ukraine sparked fears of a gas cutoff to Europe.
European natural gas prices fell Monday after Canada said it would return a turbine needed for the maintenance of the Nord Stream 1 gas pipeline to Germany, raising hopes for easing tensions.
The pipeline supplies Germany with most of its Russian gas and the maintenance shutdown is expected to last until at least July 21, and Europe is worried that Russia may decide not to restart the pipeline at all.