U.S. natural gas futures for September delivery climbed 3.5 percent Wednesday, reaching $2.87 per million British thermal units on the New York Mercantile Exchange—the highest price for front-month contracts since July 24.
The rally reflects near-term demand strength. Cooling Degree Days, a measure of energy demand for air conditioning, rose to 217 from 212 Tuesday. Meteorologists project mostly warmer-than-normal temperatures through September 2, supporting sustained cooling demand from gas-fired power plants, which generate approximately 40 percent of U.S. electricity.
Ritterbusch Associates attributed the move to bullish adjustments in short-term temperature outlooks for the next one to two weeks. But the consultancy cautioned that supply remains a major impediment to sustained price strength.
U.S. natural gas output in the Lower 48 states averaged 111.5 billion cubic feet per day so far in August, up from July's monthly record of 110.7 bcfd. Record production and mild spring weather earlier this year have kept inventories above the five-year average since March, even during weeks of above-normal summer temperatures.
LSEG projects average gas demand in the Lower 48 states will decline slightly from 114.8 bcfd this week to 113.6 bcfd next week, though next week's forecast was revised higher compared to Tuesday's outlook. Flows to nine major U.S. liquefied natural gas export plants averaged 17.2 bcfd so far in August, holding steady with July but slightly below June's monthly record of 17.4 bcfd.
Investors await the U.S. Energy Information Administration's weekly gas storage report Thursday, which will provide crucial data on inventory levels.
In related energy markets, oil prices steadied near three-week highs. Uncertainty surrounding shipping through the Strait of Hormuz supported crude values. European wholesale gas prices traded within a narrow range on soft demand and strong supply.
