Texas Heat Sends Natural Gas Prices Soaring to One-Month High

Natural gas futures have hit a one-month high as Texas heat lifts prices. At 17:00 GMT, September natural gas futures were trading at $2.837, up $0.061 or 2.20%.

The surge in prices comes amidst lower-48 dry gas output dipping to 111.5 to 111.6 Bcf per day in August, above July's record. Wednesday's data showed a modest pullback in daily production, but the timing was crucial as temperatures rose across the South and West.

The production dip combined with rising heat demand has tightened the near-term balance faster than either factor would alone. Producers have been putting enough gas into the system to absorb summer power demand for months, but Wednesday marked the first session where the production number and weather forecast moved in the same direction at the same time.

The strong exports of natural gas, with LNG feedgas deliveries to major U.S. export terminals holding near 17.2 to 17.7 Bcf per day, have also contributed to the price increase. The European and Asian buyers are turning towards U.S. supply due to Middle East tensions limiting LNG shipping through the Strait of Hormuz.

The Thursday's EIA Report will be the first hard test of this rally. Working gas in storage remains above the five-year seasonal average after a spring of mild weather and strong production allowed supplies to build.