Heat Wave Drives Up US Natural Gas Prices Amid Supply Constraints

Natural gas prices have surged due to a scorching heat wave across the US. The extreme temperatures are driving power plants to consume more gas, causing sustained pressure on supplies.

The forecast for above-average temperatures through September 4 suggests that high demand will persist, keeping natural gas prices elevated. Grid operators are already relying heavily on natural gas-fired plants to meet the load, and any further heat spike could tighten the market further.

A new pipeline in West Texas has increased gas flows out of the Permian Basin, but this is weighing on the Henry Hub benchmark, which serves as the benchmark for North American natural gas futures. Meanwhile, regional hubs like Waha in West Texas are seeing prices firm up due to local supply and pipeline constraints.

Natural gas was trading at $2.773 per million British thermal units at the close, with Texas grid operators expecting peak demand to pass the July record each day from Friday through Tuesday.