A natural gas pipeline runs through mustard plants in the burn zone of Chino Hills State Park, as the coronavirus disease (COVID-19) pandemic continues, in Chino Hills, California, U.S., April 21, 2021. REUTERS/Lucy Nicholson

July 7 (Reuters) - U.S. natural gas futures jumped about 14% on Thursday to their highest in a week, supported by a much smaller-than-expected storage build last week as power generators burned lots of gas to keep air conditioners humming during an extreme heat wave.

Even before the government released the storage report, prices were already up about 5% because last week's heat wave was still scorching much of the country. Power demand in Texas has kept breaking all-time highs, and gas output has dropped in recent days. read more

The U.S. Energy Information Administration (EIA) said U.S. utilities added 60 billion cubic feet (bcf) of gas to storage during the week ended July 1, much lower than the 74 bcf analysts forecast in a Reuters poll. It compared with an increase of 25 bcf in the same week last year and a five-year (2017-2021) average increase of 60 bcf.

The storage build was expected to be bigger due partly to the outage at the Freeport liquefied natural gas (LNG) export plant in Texas, the second-biggest U.S. LNG export plant. It was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. read more

"Today’s strong (price) advance ... not only reflected some bullish spillover from the oil (market) but also a much smaller storage injection per the EIA than had generally been expected," said analysts at Ritterbusch and Associates, a consultancy.

Ritterbusch noted the forecast miss in the storage build underscores the difficulty in factoring in the Freeport LNG outage.

Front-month gas futures rose 78.7 cents, or 14.3%, to settle at $6.297 per million British thermal units (mmBtu), their highest close since June 29 and their biggest daily percentage gain since early February when prices jumped about 16%.

So far this year, the contract is up about 67% as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears Moscow would cut gas supplies to Europe.

Gas was trading around $53 per mmBtu in Europe and $40 in Asia .

Oil futures gained about 4% as tight supply concerns outweighed recession fears.

Since mid-June, Russia has exported around 3.7 bcfd of gas on the three main lines into Germany - Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route.

That is down from around 6.5 bcfd in early June and an average of 9.4 bcfd in July 2021.

U.S. futures lag far behind global prices because the United States is the world's top producer, with all the gas it needs domestically, while capacity constraints limit LNG exports.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 95.9 bcfd so far in July from 95.1 bcfd in June and not far below the monthly record of 96.1 bcfd in December 2021.

Over the past two days, however, output was on track to drop 2.4 bcfd to a preliminary three-week low of 94.2 bcfd on Thursday. Preliminary data is often revised later in the day.

With hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from 96.2 bcfd this week to 99.0 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Wednesday.

The average amount of gas flowing to U.S. LNG export plants has held at 11.2 bcfd so far in July, the same as in June. That was down from 12.5 bcfd in May and a monthly record of 12.9 bcfd in March due to the Freeport outage.

The seven big U.S. export plants can turn about 13.6 bcfd of gas into LNG.

Having that extra gas in the United States during the Freeport outage has already caused U.S. prices to drop about 40% from nearly a 14-year high above $9 per mmBtu in early June, just before the LNG plant shut.

Our Standards: The Thomson Reuters Trust Principles.

High water temperatures threaten to reduce France's already unusually low nuclear output, piling more pressure on operator EDF at a time when half its reactors are offline due to maintenance and corrosion issues.

Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.

Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.

The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.

The industry leader for online information for tax, accounting and finance professionals.

Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.

Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.

Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.

All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.