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US Natural Gas Update: Prices Rise 2%+ on Rising Cooling Demand

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US natural gas futures pared earlier gains in after-hours trading on Monday but remained higher on the session as rising temperatures across much of the country boosted expectations for stronger cooling demand.

The front-month Henry Hub contract and the continuous contract each rose 2.16% to settle at $3.024 per million British thermal units.

Prices climbed to a 1.75-month high for the nearest futures contract, according to Barchart, as forecasts for hotter-than-normal weather lifted expectations for gas-fired electricity demand tied to increased air-conditioning use.

Commodity Weather Group said warm temperatures are expected across the eastern half of the US from May 27 through Jun. 1, which should support prices.

However, "Near-term warmth is expected to give way to a sharp midweek cooldown before temperatures return closer to seasonal norms into early June," Gelber & Associates said. "That suggests the current power burn strength may be difficult to sustain straight through the Memorial Day period."

On the supply side, lower-48 gas demand on Monday was estimated at 69.9 billion cubic feet per day, up 2.5 Bcf/d from Friday and 9.2% higher than a year earlier, Barchart said, citing BNEF data.

Gelber said overnight power-sector demand, or power burn, jumped 5.4 Bcf/d to 40.0 Bcf/d as cooling demand strengthened, while residential and commercial demand fell 3.2 Bcf/d to 9.7 Bcf/d as seasonal heating demand continued to fade.

On the supply side, Barchart said US dry gas production slipped to 108.9 Bcf/d on Monday, down 800 MMcf/d from Friday, though still 1.3% above year-ago levels.

Gelber said production remains stable, but lower Canadian imports have tightened balances. Canadian inflows fell to 3.7 Bcf/d, the lowest level in two weeks, amid seasonal maintenance activity, making the market more sensitive to incremental weather-driven demand.

BNEF data showed net flows to US LNG export terminals rose slightly to 17.9 Bcf/d on Monday, up from Friday and 1.7% higher week-on-week. Feedgas flows were running below capacity, their combined 20 Bcf/d plus capacity, due to seasonal maintenance.

In geopolitical developments, US President Donald Trump said in a Truth Social post on Monday that he had postponed a planned Tuesday military attack on Iran following requests from Gulf state leaders.

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