Soaring U.S. temperatures driving up natural gas prices
In the world of energy, the natural gas sector in the United States is experiencing a surge, with LNG net flows to export terminals reaching an estimated 15.2 billion cubic feet per day (bcf/day) on Tuesday, marking a 4.0% weekly increase.
This growth comes amid a slightly lower-than-average nat-gas inventory level, as of September 5, with a year-on-year decrease of 1.3%. However, inventories remain 6.0% above their 5-year seasonal average, signaling adequate nat-gas supplies.
The increased production is not surprising, given that US nat-gas production is currently near a record high. The number of active US nat-gas drilling rigs has also reached a 2-year high, albeit slightly below the peak of 124 rigs posted on August 1. The week ending September 12 saw the number of active rigs remain unchanged at 118.
This surge in production has contributed to a rise in US electricity output. Over the 52-week period ending September 6, electricity output rose +2.97% year-on-year to 4,264,559 GWh. Similarly, US (lower-48) electricity output in the week ended September 6 increased +1.03% year-on-year to 83,003 GWh.
Meanwhile, US (lower-48) dry gas production on Tuesday was 106.0 bcf/day, a 4.8% year-on-year increase.
The warmer forecast for the eastern two-thirds of the US for September 26-30 could boost nat-gas demand, as forecasters predict late summer heat. This trend is further supported by Forecaster Atmospheric G2's forecast of much hotter-than-normal temperatures across most of North America for September 21-25.
October nat-gas prices recovered from a 2-week low on Tuesday, with Oct Nymex natural gas closing up +0.067 (+1.97%).
Despite the lack of specific weather forecasts for the period September 21-30, 2025, predictions suggest that the increased temperatures will affect natural gas demand and storage accumulation.
Gas storage in Europe, as of September 14, was 81% full, compared to the 5-year seasonal average of 87% full for this time of year.
Disclosure: Rich Asplund did not have positions in any of the securities mentioned in this article.
