US Natural Gas Market Sizzles Amid Heat Wave and Supply Surge

The US natural gas market is experiencing a heat wave, with temperatures soaring into the 90s and 100s across the southern two-thirds of the country. This has led to increased demand for natural gas, particularly in the form of liquefied natural gas (LNG), which reached 18.7 Bcf per day on Monday, its highest level in over a month.

The surge in LNG feedgas was also reflected in European gas prices, which jumped 11% to a two-week high on Monday. However, the export market has reason to keep pulling, as European storage levels are currently at 58%, down from a five-year average of 74%. This has led to expectations that demand will remain strong in September.

Despite this, production is still running ahead of demand, with lower-48 dry gas output hitting 113.1 Bcf per day on Monday, up 2.9% year-over-year. The Energy Information Administration (EIA) expects 2026 dry gas production to average 111.2 Bcf per day.

However, the market is set to receive an influx of additional supply in September, with the Hugh Brinson pipeline expected to reach its full 1.5 Bcf-per-day capacity on September 1. This will route more Permian gas straight to Henry Hub as summer cooling demand fades from the calendar.