Natural gas flares at a production facility owned by Exxon near Carlsbad, New Mexico, U.S. February 11, 2019. REUTERS/Nick Oxford
September 21 (Reuters) – U.S. Natural gas futures jumped about 4% to a near one-week high on Wednesday, on forecasts of stronger U.S. gas demand this week than previously expected and renewed concerns about a possible U.S. rail strike.
A rail strike could increase demand for gas by threatening the supply of coal to the power plants.
Coal fuels about 20% of power generation in the US. About two-thirds of the country’s coal-fired power stations receive coal by rail. When coal or other fuels are not available for power generation, utilities typically burn more gas to produce power. Gas already provides about 37% of US electricity.
US gas futures lag far behind global prices because the US is the world’s best producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport breach prevent the country from exporting more LNG. This may interest you : Families find joy in camp lifestyle | News, Sports, Jobs.
Data provider Refinitiv said average gas production in the lower 48 US states rose to 98.8 bcfd so far in September from a record 98.0 bcfd in August.
With cooler fall weather, Refinitiv projected that average U.S. gas demand, including exports, would fall from 92.3 bcfd this week to 89.8 bcfd next week. The forecast for this week was higher than Refinitiv’s outlook on Tuesday, while the forecast for next week was lower.
The average amount of gas flowing to US LNG export facilities rose to 11.3 bcfd so far in September from 11.0 bcfd in August. That compares with a monthly record of 12.9 bcfd in March. The seven major US export facilities can turn 13.8 bcfd of gas into LNG.
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