U.S. natural gas futures rebounded from two straight sessions of losses as weather forecasts called for the hottest temperatures of the summer, with cooling demand expected to lift power-sector gas burn above 44 bcfd.
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U.S. natural gas futures rebound 2.7% as summer heat boosts demand
U.S. natural gas futures rebounded from two straight sessions of losses on Tuesday, as weather forecasts called for the hottest temperatures of the summer so far, lifting expectations for cooling-driven demand.
"The market thinks the heat wave is going to be short-lived and that next week temperatures will cool back to normal. With production remaining strong, that's keeping the market relatively well supplied, and that is driving prices lower," said Phil Flynn, senior analyst at Price Futures Group.
Front-month Henry Hub futures for August delivery rose 8.2 cents, or 2.7%, to $3.28 per million British thermal units in afternoon trading, recouping losses from the prior two sessions. The contract had fallen 2.5% on Monday to settle at $3.20. Cooling degree days, a measure of energy demand for air conditioning, climbed to 243 on Tuesday from 224 on Friday, well above the 30-year norm of 163 for this time of year, according to LSEG data.
The price rebound comes as traders weigh near-term weather-driven demand against persistent supply abundance that has kept storage levels elevated. U.S. natural gas production in the Lower 48 states averaged 110.2 bcfd in the current week, holding near the December 2025 record of 110.6 bcfd, LSEG data show. Stockpiles stood at about 5.7% above the five-year average after a near-normal 76 bcf injection in the week ended June 19, according to the Energy Information Administration.
Power-Sector Demand Set to Surge
LSEG projected average gas demand in the Lower 48, including exports, would rise to 109.2 bcfd next week from 105.8 bcfd this week, driven largely by power plants. Gas-fired power generation, which accounts for about 40% of U.S. electricity, is expected to burn 44.6 bcfd next week, up from 41.2 bcfd in the current period. The forecasts for this week were higher than last week's projections.
Consultancy Ritterbusch & Associates said in a note that while it maintains a bullish trading stance, "the expected trip higher from here is likely to be characterized by a steady/choppy uptrend with a lot of backing and filling with any sharp price spikes heavily dependent upon some extreme hot temperature forecasts within the second half of July."
LNG Flows Hold Steady Amid Strait of Hormuz Uncertainty
Average gas flows to the nine big U.S. LNG export plants rose to 17.2 bcfd so far in June from 17.1 bcfd in May, though still below the monthly record of 18.8 bcfd set in April. Dutch and British gas prices rose on Monday amid uncertainty over shipments through the Strait of Hormuz, even as Iran and the United States agreed to halt recent hostilities in the Gulf and Middle East.
The last time Henry Hub traded above $3.50 was in early June, before production data showed output holding near record levels. If the heat wave extends into late July as some forecasters suggest, prices could test that level again. But with storage already above normal and production at 110 bcfd, any rally may be capped unless extreme temperatures persist through August.
This article is for informational purposes only and does not constitute investment advice.
