Energy

U.S. natgas posts best day in two weeks on rising cooling demand

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Aug 3 (Reuters) - U.S. natural gas futures gained on Tuesday, registering their biggest daily gain in two weeks, as forecasts continued to signal hotter weather over the coming weeks, which tends to increase gas demand for cooling.

Front-month gas futures settled at $4.027 per million British thermal units, with a gain of 9.2 cents, or 2.3%, their most since July 20.

"We've got some hot weather in most of the gas-consuming regions of the U.S., and the market will stay strong as long as the weather remains hot," said Thomas Saal, senior vice president of energy at StoneX.

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"With higher gas prices outside the U.S., LNG exports should remain elevated, while supply ramps up at a slower pace than before, keeping the market tight."

Data provider Refinitiv projected U.S. demand, including exports, will rise from an average of 90.8 billion cubic feet per day (bcfd) this week to 95 bcfd next week.

The amount of gas flowing to U.S. LNG export plants averaged 10.8 bcfd in July, up from 10.1 bcfd in June but still below April's 11.5-bcfd record.

Refinitiv said average U.S. production would increase slightly to 92.3 bcfd next week from 92 bcfd this week. That is still well below November's all-time monthly high of 95.4 bcfd.

With European gas prices near record levels and Asian gas trading over $15 per mmBtu, analysts expect U.S. LNG exports to remain elevated this year.

"The bulls are taking a breath after running up the prices, waiting for other market signal to go even higher," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.

Zhu said some fundamental reasons for the high prices include higher demand due to summer heat, a forecasted very active storm season, a large storage deficit and record gas exports (both the LNG and pipeline exports).

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Reporting by Nakul Iyer in Bengaluru, additional reporting by Swati Verma; editing by Jonathan Oatis and Marguerita Choy

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