- Natural gas futures rallied nearly 2.0% to $2.786 per MMBtu in morning trading today, bouncing back sharply from Thursday’s steep decline as weather models shifted to show hotter-than-normal temperatures persisting across the U.S. South well into early September.
- Updated weather models reversed the previous cooling trend signal, indicating that hotter-than-normal temperatures will persist across the U.S. South into early September.
- The EIA reported a storage injection of only 16 billion cubic feet (bcf), which is below the five-year average of 29 bcf and last year's injection of 19 bcf.
- The symmetrical triangle pattern has tightened, with $2.69 and $2.89 emerging as key levels that could determine the next directional move.
- Natural gas sold off sharply after the Commodity Weather Group flagged a potential cooling trend in the U.S. South.
- Forecasts indicate that Houston will experience average highs near 100°F from August 20 through August 23, roughly five degrees above seasonal norms, driving expectations for elevated gas-fired power generation demand.
- Global demand for U.S. LNG exports is underpinned by ongoing geopolitical issues, including severely curtailed LNG shipping through the Strait of Hormuz and European gas storage at historic lows.
Natural gas futures rallied nearly 2% to $2.786 per MMBtu as forecasts indicated hotter-than-normal temperatures across the U.S. South, with Houston expected to see highs near 100°F from August 20-23. This surge in demand for gas-fired power generation is expected to increase air-conditioning loads.6
Weather models shifted to show persistent heat, reversing earlier predictions of a cooling trend, which had caused a sell-off in the previous session. Traders responded by covering short positions, contributing to the price rebound.
U.S. utilities injected only 16 billion cubic feet of gas into storage, significantly below the five-year average of 29 bcf, indicating that summer heat is absorbing supply more aggressively than anticipated. Despite total inventories remaining above seasonal norms, the leaner-than-expected build supports a bullish outlook.
Geopolitical factors, including reduced LNG shipping through the Strait of Hormuz and low European gas storage levels, continue to bolster global demand for U.S. LNG exports. The market is closely watching key price levels at $2.69 and $2.89, which could determine the next directional move for natural gas futures.7
A break below $2.69 would signal a bearish trend, while a move above $2.89 could shift the balance back toward buyers, highlighting the importance of the developing symmetrical triangle pattern in the market.
“The EIA reported a storage injection of only 16 bcf, well below the five-year average of 29 bcf, signaling stronger summer demand. Meanwhile, forecasts for Houston highs near 100°F through August 23 and curtailed LNG shipping through the Strait of Hormuz continue to underpin bullish sentiment.”
