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US Natural Gas Update: Futures Break $3 on Stronger Cooling Demand

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US natural gas futures climbed in midday trade on Monday to a seven-week high, supported by reduced production and strengthening cooling demand.

Front-month Henry Hub futures and the continuous contract both rose 2.70% to $3.04 per million British thermal units.

Domestic production declined, with some producers trimming activity in response to weak spot pricing, Trading Economics said, adding that output has fallen to a 15-week low.

At the time, Pinebrook Energy Advisors noted that gas-fired power generation demand reached seasonal highs as the first significant cooling demand event of the year spread across the central and eastern US.

Aegis Hedging said power demand increased by 5.4 billion cubic feet per day from Friday as continental US temperatures rose to an average of 74 degrees Fahrenheit, with modeled demand expected to remain elevated through the back half of the week before easing into the weekend.

Tradition Energy analyst Gary Cunningham said power-sector demand is expected to exceed 40 Bcf/d, adding that New York and New England electricity prices spiked overnight, with some New York City intervals exceeding $800 per megawatt-hour amid early-season heat.

PJM day-ahead prices also strengthened for Monday afternoon, with Baltimore Gas and Electric zones clearing near $1,000/MWh during peak evening hours.

Weather also remains a key driver for medium-term sentiment, with traders also beginning to factor in potential El Nino-related temperature impacts. The National Oceanic and Atmospheric Administration places an 82% probability of El Nino development by July, according to Aegis Hedging.

On the LNG side, feedgas flows remained depressed due to seasonal maintenance. Vortexa's weekly tracker on Monday showed US LNG shipments fell 2% last week compared with the prior four-week average.

Trading Economics said flows to major export terminals have eased from April's monthly record of 18.8 Bcf/d to about 17 Bcf/d so far in May, with daily output dropping to a 15-week low amid maintenance at facilities including Golden Pass and Freeport LNG.

Cunningham added that LNG feedgas remains constrained by seasonal maintenance and could stay below a full 20 Bcf/d utilization pattern for several weeks, potentially limiting a stronger summer rally if exports do not recover.

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