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US Natural Gas Update: Futures Rise on Sustained Heat Forecast

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US natural gas futures moved higher in midday trading Wednesday as hotter weather forecasts drew buyers back into the market ahead of Thursday's front-month contract expiration.

The front-month Henry Hub contract was up 4.87% at $2.904 per million British thermal units, while the continuous contract gained 3.40% to $2.917/MMBtu.

Forecast temperatures remained above normal across much of the Mid-Atlantic and South through early September, supporting expectations for continued cooling-related gas demand.

Fundamental balances also supported the price hike. US natural gas production stood at 111.3 Bcf/d and Canadian imports at 4.6 Bcf/d, putting total supply near 115.9 Bcf/d, Gelber & Associates said Wednesday.

NRG put overall US natural gas demand at 86 Bcf/d on Wednesday, while Gelber said power-sector demand was holding at 49.9 Bcf/d. LNG feedgas had recovered to 18.5 Bcf/d, and NRG said exports to Mexico edged higher to 7.7 Bcf/d.

Expiration-related positioning was likely amplifying the move, but the underlying physical balance had also tightened from earlier in August, Gelber added.

Looking ahead to Thursday's government data regarding inventories, Gelber forecast a 15 Bcf injection for the latest reporting week, compared with an 18 Bcf build in the same week last year. Reuters said earlier in the week it expects a 22-27 Bcf build for the week ended Aug. 21, below the five-year average of 33 Bcf.

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