High temperatures are driving up cooling demand, US natural gas futures have risen slightly, and LNG export demand has reached its highest level since the end of June.

U.S. natural gas futures rose slightly on Monday, as recent weather forecasts indicated that many cities in the southern, eastern, and northeastern United States would experience high temperatures in the coming days, leading to an expected increase in demand for air conditioning and, consequently, a rise in the power sector's demand for natural gas. Meanwhile, the Freeport LNG facility in Texas resumed operations after maintenance, pushing demand for feed gas at U.S. liquefied natural gas (LNG) export terminals to its highest level since the end of June. However, U.S. natural gas production remains close to record highs for the year, limiting further upward movement in futures prices. As of 10:37 PM Beijing time, October natural gas futures on the New York Mercantile Exchange rose by 0.7 cents, or about 0.2%, to $2.895 per million British thermal units (MMBtu). The latest weather forecast from NatGasWeather.com indicates that between August 31 and September 5, many cities in the southern, eastern, and northeastern U.S. could see temperatures exceeding 100 degrees Fahrenheit. Prolonged high temperatures typically lead residents and businesses to increase air conditioning usage, thereby raising electricity demand. Since natural gas is one of the key fuels in the U.S. power generation sector, an increase in electricity load usually drives up natural gas consumption. However, the supporting effect of weather factors on natural gas demand still presents certain uncertainties. One recent forecast has reduced the projected cooling degree days (CDD) by 11 from previous predictions. Cooling degree days are primarily used to measure the magnitude and duration of temperatures above a specific baseline and are an important indicator for assessing cooling demand in the energy market. A decline in CDD forecasts suggests that while the weather may remain hot, the potential cooling demand could be lower than previously expected. In addition to weather factors, the rebound in U.S. LNG export demand has also provided support for natural gas prices. The Freeport LNG facility in Texas resumed operations last week after maintenance, increasing the LNG export facility's demand for feed gas. Data indicates that on Monday, U.S. LNG export terminals are expected to receive about 19.6 billion cubic feet per day of natural gas, a 15.8% increase from the previous week, pushing the gas demand related to U.S. LNG exports to its highest level since the end of June. The resumption of operations at LNG export facilities means more domestic natural gas needs to be transported to liquefaction terminals for processing and overseas export, which typically reduces the supply available for the domestic U.S. market, providing some support for natural gas prices. Meanwhile, U.S. exports of natural gas to Mexico on Monday are expected to reach about 7.9 billion cubic feet per day, a 1.7% decrease from the previous week. Despite the favorable conditions of high temperatures and a rebound in LNG export demand, strong U.S. natural gas production remains a key factor suppressing price increases. Data shows that the estimated dry gas production in the U.S. 48 states on Monday is about 11.46 billion cubic feet per day, a year-on-year increase of 5.9%. During the weekend, natural gas production had already risen to near record high levels for the year. The sustained high supply means that even with increasing demand from power generation and LNG exports, the U.S. market still has ample natural gas supply, which limits the upward price potential for futures. On the demand side, the total natural gas demand in the U.S. 48 states on Monday is projected to be around 78.4 billion cubic feet per day, marking a significant year-on-year increase of 17.8%. Therefore, the current U.S. natural gas market is clearly showing a tug-of-war between supply and demand. On one hand, forecasted high temperatures in the coming days may boost demand for air conditioning and power generation, while the end of maintenance at Freeport LNG has driven feed gas demand to its highest level since the end of June; on the other hand, daily natural gas production in the U.S. has reached about 11.46 billion cubic feet and is close to record highs this year, with ample supply continuing to limit price increases. Under the combined influence of bullish and bearish factors, U.S. natural gas futures rose only slightly on Monday. In the coming days, whether weather forecasts turn hotter, whether LNG export terminal demand can maintain these high levels, and whether U.S. natural gas production will continue to break records will become important factors influencing the price trend of natural gas.