US natural gas futures edged slightly higher in after-hours trading on Tuesday, as above-normal temperatures across the densely populated Northeast were expected to persist over the next few days before easing toward or below seasonal norms for the remainder of the month.
The front-month Henry Hub contract and the continuous contract both rose 0.9% to $2.923 per million British thermal units.
Near-term weather forecasts supported prices, with Pinebrook Energy Advisors saying Wednesday is expected to be the hottest day of the summer so far on a population-weighted basis and PJM Interconnection is forecast to reach peak electricity demand of 164 gigawatts, near a record high.
However, longer-term demand expectations weakened. Criterion cut cumulative gas demand by 7 billion cubic feet per day across its forecast period, citing softer consumption.
The firm expects temperatures across the Lower 48 states to briefly surpass the 10-year average on Wednesday before returning to near-normal levels for the rest of the forecast, limiting weather-driven demand, according to Aegis Hedging.
Separately, Barchart, citing Commodity Weather Group, said forecasts had shifted toward cooler conditions, with below-average temperatures expected in the US Southwest through July 23.
Pinebrook Energy Advisors said gas demand from the power sector underperformed during a similar heat wave in June as strong wind generation in the Midwest and Texas displaced gas-fired electricity production.
While recent summers have seen gas burn exceed 50 Bcf/d during peak heat events, that threshold has not yet been reached this season. Another shortfall in demand during this week's extreme heat could prompt the market to further reassess seasonal natural gas demand fundamentals.
Celsius Energy said natural gas accounted for 43% of fuel used to generate electricity on Monday, with power burn estimated at 45.1 Bcf, up 2.6 Bcf from the previous day but down 0.9 Bcf from a year earlier.
Average power burn over the past seven days was 43.5 Bcf/d, down 3.7 Bcf/d from the same period last year.
Lower 48 gas demand on Tuesday totaled 80.9 Bcf/d, up 1.9% from a year earlier, Barchart reported, citing BNEF data.
On the supply side, production stood at 109.4 Bcf/d, while Canadian imports of 6.6 Bcf/d kept total supply at 116.1 Bcf/d, according to Gelber & Associates.
"That leaves Henry Hub caught between a short burst of summer demand and a supply base that remains capable of covering it, with the market likely needing either sustained heat or a meaningful LNG recovery before the current downward pressure begins to ease," Gelber & Associates said.
LNG feedgas demand remained subdued at 18.2 Bcf/d as maintenance work at the Sabine Pass and Freeport export facilities continued to constrain deliveries, according to Criterion.