September Nymex natural gas (NGU26) on Wednesday closed up +0.038 (+1.37%).
Nat-gas prices rallied to a 4-week high on Wednesday and settled higher. The shift in US weather forecasts to show intensely hot temperatures covering the US South and West through the end of this month propelled nat-gas prices higher on Wednesday. The Commodity Weather Group said on Wednesday that forecasts shifted to hotter, with above-average temperatures expected across the western and southern US through September 2, potentially boosting nat-gas demand from electricity providers to power increased air conditioning use.
Expectations for a smaller-than-normal build in US nat-gas storage also lifted prices on Wednesday. The consensus is that EIA nat-gas inventories rose by +14 bcf in the week ended August 14, below the five-year average build for the week of +29 bcf.
US (lower-48) dry gas production on Wednesday was 112.0 bcf/day (+2.7% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 83.6 bcf/day (+4.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 17.6 bcf/day (-2.1% w/w), according to BNEF.
As a bearish factor, the US Energy Information Administration (EIA) last Tuesday projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average. US nat-gas inventories are currently +6.7% above their 5-year seasonal average, a sign of robust supplies.
Nat-gas prices have some negative carryover from August 4, 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.
A bearish medium-term factor for nat-gas prices 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.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 15 rose +2.36% y/y to 101,498 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending August 15 rose +2.24% y/y to 4,359,446 GWh.
Last Thursday's bearish weekly EIA report showed a +36 bcf increase in US nat-gas inventories for the week ended August 7, larger than market expectations of +31 bcf and the 5-year weekly average of +33 bcf. As of August 7, nat-gas inventories were down -1.0% y/y and +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 16, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 78% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ended August 14 rose by +4 to 128 rigs, modestly below the 3-year high of 134 rigs set in February 2026.
