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US Natural Gas Update: Futures Flat Despite Warmer Weather Forecasts

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US natural gas prices were little changed in midday trade as traders weighed hotter-than-expected weather forecasts against robust production and comfortable inventory levels.

Both the front-month Henry Hub contract edged up 0.04% to 2.772 per million British thermal units, while the continuous contract rose 0.39% to $2.822/MMBtu.

Weather forecasts turned warmer over the weekend, with above-average temperatures expected across Texas and much of the US through Sept. 7, pointing to stronger demand for gas-fired power generation as air-conditioning use rises.

August is also on track to become the hottest population-weighted August on record, Trading Economics said, citing data from Commodity Weather Group, potentially providing further support to summer gas demand.

Gelber & Associates said the seven-day average for exports to Mexico reached a new record of 8.46 billion cubic feet per day, with strong cross-border demand continuing through late August.

On the supply side, output declined over the weekend, particularly in the Appalachian region, where low near-term prices have reduced producers' incentives. Still, overall production remains strong.

Lower 48 output averaged 111.5 Bcf/d in August, up from July's record 110.7 Bcf/d, according to Trading Economics.

Gas inventories have remained above the five-year average since March, limiting the impact of stronger summer demand and helping keep the market well supplied.

Meanwhile, average natural gas flows to the nine major LNG facilities were about 17.1 Bcf/d, down from capacity due to maintenance at Freeport LNG.

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