US natural gas futures inched higher in midday trade on Tuesday, supported by heightened geopolitical risk in the Middle East, even as weather models pointed to cooler-than-normal conditions across key US regions.
The front-month Henry Hub contract rose by 0.83% to $2.931 per million British thermal units, while the continuous contract advanced 0.60% to $3.039/MMBtu.
Energy markets priced in a higher risk premium after reports of US strikes on Iranian missile launch sites and vessels near the Strait of Hormuz, escalating concerns over potential supply disruption through the key transit corridor.
Weather outlooks turned more bearish for demand. Forecasts now show below-average temperatures across California through May 30, followed by a cooler pattern across the Eastern US from May 31 through June 4, Bloomberg reported, citing data from the Commodity Weather Group.
Total Lower-48 demand on Tuesday was about 66.6 billion cubic feet per day, up 6.8% over the year, according to BNEF data. Power burn was estimated at 18 Bcf, rising 0.8 Bcf from the previous day, according to Celsius Energy.
On the supply side, US dry gas production was estimated at 110.6 Bcf/d, up 3.1% over the year but down 0.4% week over week, according to BNEF data.
On the export side, dry gas flows to Mexico were near 7.8 Bcf/d, down 3.9% over the week. LNG feedgas deliveries averaged roughly 18.4 Bcf/d, up 8.8% over the week, but still below recent highs as multiple facilities remain constrained by maintenance.
Market participants cited planned outages at Cameron and Golden Pass, along with unplanned issues at Freeport following a recent outage event, as continuing to weigh on export capacity, NRG Energy said.
Overall, tighter output and firmer demand over recent weeks have narrowed the US storage surplus to roughly 6% above seasonal norms, down from about 7% the prior week, according to Trading Economics estimates.