US Temperature Forecasts Send Natural Gas Prices Soaring

Natural gas prices surged on Tuesday as forecasts of hot US temperatures boosted demand for electricity to power air conditioning use. According to forecasts from the Commodity Weather Group, above-average temperatures are expected across the western and southern US through September 1.

The increase in natural gas prices comes despite robust supplies, with lower-48 state gas production up 2.5% year-over-year and estimated LNG net flows to US LNG export terminals up 2.7% week-over-week.

However, a bearish factor for natural gas prices is the projected swelling of US nat-gas storage levels to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average.