US natural gas futures extended gains in midday trade on Tuesday as an early-summer heatwave moves across the eastern half of the US, lifting expectations for stronger power-sector demand.
The front-month Henry Hub contract and the continuous contract both rose 3.43% to $3.29 per million British thermal units.
A persistent and potentially hazardous heat dome is expected to cover large portions of the country this week, with forecasters calling for record or near-record temperatures through the July 4 Independence Day holiday period.
Trading Economics said New York City temperatures could reach 100 degrees Fahrenheit, tying a record set in 1966.
The extreme heat is expected to drive higher cooling load, with gas-fired generation, responsible for roughly 40% of US electricity output, remaining the key swing factor for demand. Power burn continues to lead consumption at 47.6 billion cubic feet per day, according to Gelber & Associates.
However, near-term demand gains are modest. NRG Energy noted that power burn is up only about 1 Bcf/d on Tuesday despite the onset of extreme heat in the Midwest, while residential and commercial demand is projected to slip by 0.1 Bcf/d. Industrial consumption is expected to hold steady, leaving total US demand up roughly 1.1 Bcf/d.
On the supply side, conditions remain ample. Dry gas production is holding around 109.3 Bcf/d, while net Canadian imports are adding about 6.1 Bcf/d, roughly 1 Bcf/d above the June average, providing additional cushion to the market.
That leaves total supply near 115.3 Bcf/d versus demand at 115.4 Bcf/d, effectively a balanced setup that limits any strong tightening signal despite the extreme temperatures, Gelber & Associates said.
LNG feedgas demand has also firmed, reaching a three-month high, according to The Wall Street Journal. Gelber & Associates estimates feedgas flows at 19.7 Bcf/d, reflecting steady export pull.
Trading Associates said average gas flows to major export facilities rose to 17.4 Bcf/d in June. It added that Lower 48 production averaged 110 Bcf/d, up slightly from May, while inventories are tracking at about 5.9% above normal.