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September Nymex natural gas (NGU26) on Friday closed up +0.040 (+1.46%).
Nat-gas prices settled higher on Friday as forecasts for hotter US weather could potentially boost nat-gas demand from electricity providers to power increased air conditioning use. The Commodity Weather Group said on Friday that forecasts shifted to hotter, with above-average temperatures across Texas, the Southwest, and the Interior West through September 4.
Also, nat-gas prices rose as forecasts for record-high temperatures in West Texas over the next week support nat-gas demand. The largest Texas electric grid, the Electric Reliability Council of Texas, forecast peak power demand on Friday through next Tuesday that will exceed the all-time record set in July.
US (lower-48) dry gas production on Friday was 113.1 bcf/day (+4.4% y/y), according to BNEF. Lower-48 state gas demand on Friday was 80.9 bcf/day (+2.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 17.7 bcf/day (-2.6% w/w), according to BNEF.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 15 rose +2.36% y/y to 101,498 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending August 15 rose +2.24% y/y to 4,359,446 GWh.
As a bearish factor, the US Energy Information Administration (EIA) last Tuesday projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average. US nat-gas inventories are currently +6.7% above their 5-year seasonal average, a sign of robust supplies.
Nat-gas prices have some negative carryover from August 4, when Energy Transfer announced that the Hugh Brinson pipeline will be able to operate at its full transportation capacity of 1.5 bcf/day by September 1, allowing more gas supplies to flow from the Permian Basin to the US benchmark Henry Hub in Erath, Louisiana, boosting US domestic supplies.
A bearish medium-term factor for nat-gas prices is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing nat-gas heating demand.
Thursday’s weekly EIA report was slightly bearish as it showed a +16 bcf increase in US nat-gas inventories for the week ended August 14, above market expectations of +14 bcf, but below the 5-year weekly average of +29 bcf. As of August 14, nat-gas inventories were down -0.9% y/y and +6.2% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 19, gas storage in Europe was 62% full, compared to the 5-year seasonal average of 79% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ended August 21 fell by -1 to 127 rigs, modestly below the 3-year high of 134 rigs set in February 2026.
