US natural gas futures rallied on Wednesday as Middle East supply constraints persisted, helping offset bearish domestic developments.
Both the front-month Henry Hub contract and the continuous contract rose 1.83% to $2.895 per million British thermal units.
The conflict in the Middle East has reached a stalemate, with US President Donald Trump rejecting Iran's response to a US-backed ceasefire proposal earlier this week.
Meanwhile, Iran's Foreign Minister Seyyed Abbas Araghchi said on Tuesday that the country was developing a new set of rules to facilitate safe passage via the Strait of Hormuz, cementing its control over the strategically crucial waterway.
This helped offset a prediction of higher US gas output with the US Energy Information Administration raising its 2026 natural gas production estimates to 110.61 billion cubic feet per day, from a projection of 109.60 bcf per day in April.
LNG export feedgas demand, too, has dropped to 17.29 Bcf, compared to the 30-day moving average of 18.82 Bcf, according to the Bloomberg LNG Feedgas Model. This is primarily due to seasonal maintenance planned across several leading LNG export facilities.
Weather forecasts, however, have turned bearish, with almost the whole of the country expected to see above-normal temperatures from May 20 to May 26, according to the National Weather Service. This is expected to kickstart air conditioning demand with temperatures across parts of the country set to top 90 degrees.