September Nymex natural gas (NGU26) closed up +0.006 (+0.22%) on Wednesday.
Nat-gas prices settled slightly higher on Wednesday amid forecasts for warmer US weather, potentially boosting nat-gas demand from electricity providers to power an expected increase in air conditioning use. The Commodity Weather Group said on Wednesday that forecasts shifted warmer, with above-average temperatures expected across the Western US through August 14.
Gains in nat-gas prices were contained on Wednesday on the outlook for a larger-than-normal build in weekly storage. The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +30 bcf for the week ended July 31, above the five-year average for the week of +23 bcf.
Nat-gas prices also have some negative carryover from Tuesday when Energy Transfer announced that the Hugh Brinson pipeline will be able to operate at its full transportation capacity of 1.5 bcf/day by September 1, allowing more gas supplies to flow from the Permian Basin to the US benchmark Henry Hub in Erath, Louisiana, boosting US domestic supplies.
Nat-gas prices tumbled to a 3.25-month nearest-futures (Q26) low last Wednesday as recent below-normal US temperatures have reduced air-conditioning demand and allowed nat-gas inventories to be rebuilt.
A bearish factor for nat-gas prices in the medium term is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing nat-gas heating demand.
US (lower-48) dry gas production on Wednesday was 111.4 bcf/day (+2.6% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 81.4 bcf/day (+8.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 18.2 bcf/day (+0.3% w/w), according to BNEF.
Projections for higher US nat-gas production are negative for prices. On July 7, the EIA raised its forecast for 2026 US dry nat-gas production to 111.2 bcf/day from a June estimate of 111.0 bcf/day.
As a positive factor for gas prices, the Edison Electric Institute reported on Wednesday that US (lower-48) electricity output in the week ended August 1 rose +0.9% y/y to 100,254 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending August 1 rose +2.1% y/y to 4,350,538 GWh.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended July 24 rose by +28 bcf, less than expectations of +37 bcf but above the 5-year weekly average increase of +26 bcf. As of July 24, nat-gas inventories were down -1.2% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 3, gas storage in Europe was 58% full, compared to the 5-year seasonal average of 74% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending July 31 was unchanged at 127 rigs, below the 3-year high of 134 rigs set in February 2026.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
