US Natgas Prices Fall after EIA Report

US natural gas prices climbed above $2.80 per million British thermal units, reaching their highest level since July 24, as forecasts pointed to hotter weather across much of the country. Short-term temperature outlooks have turned more bullish, with Houston temperatures expected to average around 100°F (38°C) from August 20 to 23. Also, warmer-than-normal conditions are forecast through early September. However, abundant supply remains a key constraint on further gains. Lower-48 production averaged around 111.5 billion cubic feet per day so far in August, above July’s monthly record of 110.7 bcfd. Robust output and relatively mild spring weather have kept inventories above the five-year average since March, despite persistent summer heat. Meanwhile, gas flows to the nine major US LNG export facilities averaged 17.2 bcfd in August, unchanged from July and just below June’s record.

US natural gas prices climbed to $2.78/MMBtu as forecasts pointed to prolonged and intense heat across the southern and western parts of the country. Particularly high temperatures in Texas are driving greater air-conditioning use, increasing electricity demand and placing additional pressure on gas-fired power plants and the regional grid. Houston temperatures are expected to average around 100°F between August 20 and 23, while peak demand on the Texas power grid could reach a new record as wind generation declines. However, the price gains were limited by exceptionally strong domestic production. Average output in the Lower 48 states has reached 111.6 billion cubic feet per day in August, surpassing July’s record of 110.7 bcfd. Strong production and relatively mild weather earlier this year have also kept inventories above the five-year average since March. Meanwhile, gas flows to the nine major US LNG export facilities are averaging 17.2 bcfd in August, unchanged from July.

US natural gas prices fell 2% to around $2.68 per million British thermal units on Monday, their lowest level since August 7, as milder weather forecasts and expectations for larger storage injections weighed on the market. Recent weather models have moderated, pointing to less intense heat across much of the country in the coming weeks. This is expected to reduce demand for gas-fired power generation, particularly for air-conditioning, while allowing inventories to build at a faster pace. Strong domestic production is adding further downward pressure, with average output in the Lower 48 states reaching 111.6 billion cubic feet per day so far in August, exceeding July’s monthly record of 110.7 bcfd. Meanwhile, average gas flows to the nine major US LNG export facilities rose to 17.3 bcfd in August, compared with 17.2 bcfd in July.