Prices surged by 3.62% to settle at 266, driven by a combination of declining daily output, increasing LNG export flows, and persistent forecasts for hotter-than-normal weather across the U.S. through late August. This heatwave is expected to keep air conditioning demand elevated, thereby boosting gas consumption for power generation. Notably, over 40% of U.S. electricity is generated from gas-fired power plants, amplifying the fuel’s importance in periods of high cooling demand. According to LSEG data, average gas output in the Lower 48 states edged up to 108.0 billion cubic feet per day (bcfd) in August, slightly higher than July’s record of 107.9 bcfd.
However, daily output fell sharply to a three-week low of 106.0 bcfd, down by 3.7 bcfd from the July 28 record of 109.7 bcfd, indicating short-term supply tightening. Simultaneously, gas demand is set to rise from 105.1 bcfd this week to 110.5 bcfd next week, with LNG export flows increasing to 15.9 bcfd in August—approaching the April record of 16.0 bcfd. U.S. gas storage rose by 48 billion cubic feet for the week ending July 25, surpassing expectations of a 38 bcf build, taking total stocks to 3.123 trillion cubic feet.
Technically, the market saw short covering, with open interest dropping 17.65% to 36,110 as prices rose 9.3. Natural gas finds support at 260, with potential downside to 254.1, while resistance lies at 269.6, and a breakout above could lead to 273.3.
Source: Kedia Advisory
