US natural gas futures rise 2.4% on record heat forecast

US natural gas futures climbed 2.4% to $2.837 per million British thermal units as forecasts pointed to several more weeks of record heat.

US natural gas futures climbed 2.4% to $2.837 per million British thermal units Wednesday, as forecasts for several more weeks of record heat extended the summer cooling-demand rally into the September contract's final session.

"The 1-15 day weather forecast may vie for the hottest on record," Eli Rubin, an analyst at EBW Analytics, said in a note, adding that a pickup in LNG feedgas flows is adding to the demand picture.

The Nymex September contract settled up 2.4% at $2.837/mmBtu, with Henry Hub front-month futures trading at $2.83, up 2.17%. September options and contract expirations today and tomorrow will guide near-term price moves. As October moves to the front of the curve, "medium-term likelihood for a moderate rally may be accelerated due to searing heat, soft production, and returning LNG export demand," Rubin added.

The weather-driven bid is seasonal and modest in scale, but it arrives as the broader energy complex contends with the fallout of the Iran war and Strait of Hormuz disruptions. Brent crude traded at $86.99 a barrel, down 1.79%, while WTI slipped 1.63% to $81.02, as progress in Iran-Oman talks raised hopes the vital waterway could reopen.

The rally leaves front-month gas near the upper end of a range that has held since spring, yet still far below the multi-year peaks of the 2022 energy crisis, when Henry Hub briefly topped $9. The current level around $2.80 reflects a market balancing soft domestic production against weather-driven consumption and a gradual recovery in export demand.

Cooling demand is the dominant near-term driver. With the 1-15 day forecast potentially the hottest on record, power generators are expected to burn more gas to meet air-conditioning load across the southern and eastern United States. The Energy Information Administration's weekly storage report, due Thursday, will show how quickly inventories are being drawn down during the peak summer season.

LNG feedgas flows have also picked up, a sign that export demand is returning after maintenance and seasonal lulls. Higher feedgas volumes tighten the domestic supply-demand balance by diverting molecules to the export market, supporting prices even as production holds steady. The recovery in export demand is a key swing factor: when feedgas volumes climb, the market's surplus shrinks faster than weather alone would dictate.

The September contract's expiration today and tomorrow's October rollover will set the near-term tone. Traders will watch whether the rally extends as the front of the curve shifts, with the medium-term path hinging on how long the heat persists and whether LNG exports sustain their recovery. A sustained move above the recent range would mark the strongest seasonal rally since the summer of 2023, when a prolonged heat wave pushed prices above $3.

For producers, the weather support offers a modest tailwind after a soft spring that kept prices pinned near $2. For consumers, higher gas prices feed through to electricity bills during the hottest stretch of the year, a dynamic that has drawn scrutiny from policymakers in prior heat waves. The market's next test comes with Thursday's storage report and the October contract's debut as the front month.

This article is for informational purposes only and does not constitute investment advice.