U.S. natural gas production approached record highs in the recently concluded week, while the scorching heat that had been affecting Texas and other southern states subsided slightly. This development prompted market participants to lower the fuel’s price further, bringing it closer to the mid-$2 range.
The most actively traded August gas contract on the New York Mercantile Exchange’s Henry Hub experienced a decline of 5.2 cents, or 2%, settling at $2.657 per mmBtu (metric million British thermal units). This drop followed last Monday’s peak of $2.936, which marked the highest level for a front-month gas contract on the Henry Hub since March.
Market participants were eagerly awaiting the delayed weekly release of the gas storage report by the U.S. Energy Information Administration. Typically published on Wednesdays, this week’s report would be available on Thursday due to the Independence Day holiday on July 4th. The report is expected to provide insights into cooling demand for the week ending June 30.
While PowerBurn, a significant driver of natural gas demand, increased by 0.47 billion cubic feet per day (bcf/d) on Tuesday, Houston-based energy markets advisory firm Gelber & Associates reported a slight cooling trend in observed temperatures across the South Central and Central regions. This relief from the intense heat experienced in previous weeks contributed to the stabilization of gas prices.
Furthermore, although gas production declined by 0.1 bcf/d to 101.2 bcf/d the previous day, it reached nearly 0.15 bcf/d during the current holiday week, nearly matching the record highs seen in April.
Gelber & Associates added that the prolonged maintenance at gas processing plants would no longer impact production levels in the foreseeable future.
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