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Natural gas futures trended lower again Tuesday, following a holiday weekend in which production estimates climbed and maintenance work curbed flows of U.S. exports. The July Nymex gas futures contract settled at $8.145/MMBtu, down 58.2 cents on the day, after a 16.8-cent sell-off on Friday. August fell 57.4 cents to $8.138.

NGI’s Spot Gas National Avg. went the opposite direction and gained 25.5 cents to $8.105 amid favorable weather conditions early in the week.

Production topped 96 Bcf on Tuesday, hovering around a high for the year after a lackluster spring. Output was up more than 1.0 Bcf from late last week. U.S. liquefied natural gas (LNG) volumes, meanwhile, dipped to around 12 Bcf Tuesday amid repair work at a key export facility.

Estimates of LNG volumes showed a 1.0 Bcf/d drop in demand since Friday on lower nominations at the Sabine Pass terminal, according to EBW Analytics Group’s Eli Rubin, senior analyst.

This developed as wind generation in Texas “hit a new daily record on Sunday,” and as the remnants of Hurricane Agatha could dampen cooling demand in Florida later this week, the analyst added.

Agatha, the first named storm of the year in the eastern Pacific Ocean, made landfall Monday afternoon in southern Mexico as a Category 2 storm. It was the strongest May hurricane to ever make landfall in the eastern Pacific basin, according to AccuWeather.

AccuWeather meteorologists were monitoring the leftover energy from Agatha as it crossed Mexico and approached the Atlantic basin of the southern Gulf of Mexico. “There is now a good chance it could redevelop into the Atlantic’s first named storm,” the firm said.

Regardless of how the system develops, the National Hurricane Center predicted “locally heavy rainfall” that could spread to southern Florida by the end of this week.

Otherwise, Bespoke Weather Services said, forecasts pointed to average cooling demand later this week.

“The weather pattern remains generally neutral, with a minor gain in forecast demand since Friday, but nothing that wildly deviates us from normal,” Bespoke said. “We have been expecting a trend back in the hotter direction, and still think that can come around the middle of June, but so far, the modeling is not strongly making a move in that direction.

“We do have lower wind coming later this week, which could tighten balances again via enhanced power burns, after some weakening was seen over the holiday weekend,” the firm added.  

Rubin also noted that some of the recent production increase “may be due to intra-month pipeline nomination patterns that tend to show rising supply into month’s end — and production nominations are likely to reverse sharply lower as soon as” Wednesday.

“If production readings slip,” Rubin said, “it could provide further support for Nymex gas futures.”

What’s more, he noted the European Union (EU) reached an agreement to cut Russian oil imports by up to 90% by the end of the year. The move is part of a sixth round of EU sanctions. Mounting sanctions in protest of Russia’s war in Ukraine “may increase risks of Russia cutting off natural gas supplies to Europe” in retaliation, Rubin said.  

“Although European gas inventories have risen rapidly this spring,” in part because of increased imports of U.S. LNG, “the enduring threat of Russian gas shutoff could maintain elevated risk premiums” for European gas prices. This could further drive demand for U.S. exports and bolster Nymex futures, he said.

[Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now . ]

A combination of robust LNG consumption, expected strong summer cooling demand and choppy production levels could leave U.S. supplies light relative to historic norms in coming weeks, Bespoke said. These factors had sent futures to a 14-year high in May, the firm noted, and could again spark a rally this month.

The U.S. Energy Information Administration last week reported an injection of 80 Bcf natural gas into underground storage for the week ended May 20. The increase compared with the 109 Bcf injection recorded in the same week a year earlier and the five-year average build of 97 Bcf. The injection put inventories at 1,812 Bcf, well below the year-earlier level of 2,199 Bcf and the five-year average of 2,139 Bcf.

Spot gas prices advanced as heat in the South and East galvanized cooling demand.

While expected to moderate in the days ahead, NatGasWeather said Tuesday the southern and eastern United States would be “very warm to hot the next few days,” with highs of upper 80s to mid-90s. This included temperatures in the 90s across several major East Coast cities, New York and Philadelphia among them.

In the South, Tres Palacios jumped 19.0 cents to average $8.195, while Henry Hub advanced 19.0 cents to $8.455.

To the East, Cove Point surged 59.0 cents to $8.850 and PNGTS spiked $1.400 to $10.135.

While the hot conditions were expected to drive robust national demand through midweek, showers and cooler highs in the 60s across the Mountain West and Northern Plains could offset some consumption in coming days, NatGasWeather said. The milder weather is expected to push to the East as the weak wears on, curbing demand in New England in particular. Boston was expected to see highs in the 60s Thursday and Friday.

“Overall, strong national demand through Wednesday,” then “lighter” later in the week, the firm said.

Elsewhere in the Lower 48 on Tuesday, Chicago Citygate gained 29.0 cents to $8.100 and SoCal Citygate advanced 49.5 cents to $9.060.

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Weekly natural gas cash prices gave up substantial ground amid rising production and near-term forecasts for mild temperatures across much of the Lower 48.   NGI’s Weekly Spot Gas National Avg. for the Sept. 6-9 period dropped $1.010 to $7.865/MMBtu. Cash prices fell each of the holiday trading week’s four sessions. The period was abbreviated because…

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