US Natgas Prices Climb to 1-Month High

US natural gas prices surged to a one-month high of around $2.91/MMBtu on Thursday, propelled by forecasts of extended hot weather across much of the country. The Commodity Weather Group predicts several more weeks of above-average temperatures, from August 31 through September 4, in the eastern two-thirds of the US. This outlook suggests a sustained increase in cooling demand, which will require more power generation, thus keeping gas consumption high.

With temperatures expected to remain well-above average for several days, power plants will rely heavily on natural gas to meet cooling needs, reinforcing upward pressure on prices. The outlook was bolstered by the record domestic production levels in the Lower 48 states, which averaged 111.4 billion cubic feet per day (bcfd) in August, a notable rise from 110.7 bcfd in July. Despite this abundant supply, gas prices still climbed due to heightened expectations for stronger cooling demand.

Meanwhile, gas flows to the nine major liquefied natural gas (LNG) export facilities showed a slight decline to 17.1 bcfd in August, down from 17.2 bcfd in July. However, this decrease may be temporary, as LNG demand appears to be recovering. The focus now shifts to the weekly storage report, where analysts anticipate a smaller-than-normal inventory build. These market dynamics are helping to counteract the downward pressure from the strong domestic production, underpinning the upward trend in natural gas prices.