September Nymex natural gas (NGU26) closed up +0.132 (+4.96%) on Monday.
Nat-gas prices settled sharply higher on Monday on the outlook for much hotter 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 Monday that forecasts shifted to show much hotter weather in the coming weeks, particularly in the central and southern US.
Nat-gas also found carryover support from Monday’s 11% surge in European nat-gas prices to a 2-week high on uncertainty regarding the reopening of the Strait of Hormuz, keeping European nat-gas supplies tight and potentially boosting demand for US nat-gas supplies.
Last Thursday, nat-gas prices tumbled to a 3.5-month nearest-futures low on a larger-than-expected storage build that pushed nat-gas inventories +6.7% above their 5-year seasonal average, a sign of robust supplies.
Nat-gas prices also have some negative carryover from last 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.
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 Monday was 113.1 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Monday was 84.1 bcf/day (+9.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 18.7 bcf/day (+6.9% 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 last 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 bearish for nat-gas prices, as nat-gas inventories for the week ended July 31 rose by +33 bcf, above expectations of +30 bcf and above the 5-year weekly average increase of +23 bcf. As of July 31, nat-gas inventories were down -0.4% y/y, and +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 4, 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 ended August 7 fell by -3 to 124 rigs, modestly below the 3-year high of 134 rigs set in February 2026.
