Natural gas prices in U.S. markets closed on Monday with an increase of $0.065 (equivalent to 2.30%). This price increase is attributed to new forecasts for warmer weather in the United States, which may boost demand for natural gas from electricity suppliers and lead to increased air conditioning usage.
Warm Weather Predictions and Impact on Demand
The Commodity Weather Group announced that new forecasts have shifted towards warmer weather, with above-average temperatures expected across the southern United States until September 28. This situation could contribute to increased natural gas consumption during the summer and fall seasons.
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Additionally, rising natural gas prices in European markets, which have reached their highest level in 3.75 years, have also contributed to strengthening prices in the United States. A sharp decline in gas supply from the Middle East due to the closure of the Strait of Hormuz following conflicts between Iran and the United States has led to reduced natural gas storage levels in Europe and created upward pressure on prices.
Negative Factors on Prices
However, a negative factor for natural gas prices in the medium term is the forecast of a "super El Niño" in the fall and winter, which could keep temperatures above normal and reduce demand for natural gas heating. These forecasts could have a negative impact on prices.
On Monday, U.S. dry gas production stood at 114.4 billion cubic feet per day, reflecting a 5.2% increase compared to last year. Additionally, demand for gas in the lower 48 states of the U.S. reached 74.2 billion cubic feet per day on the same day, a 7.7% increase from last year. The net LNG flow to U.S. LNG export terminals also reached 19.9 billion cubic feet per day, indicating a 2.9% increase from the previous week.
A report from the Edison Electric Institute last week showed that U.S. electricity generation in the week ending September 5 increased by 19.69% compared to last year, reaching 100,302 gigawatt-hours. This increase in electricity generation could help boost demand for natural gas.
Furthermore, the U.S. Energy Information Administration (EIA) has projected that U.S. natural gas storage levels will rise to 3,985 billion cubic feet by the end of October, the highest level in the past 10 years and 5% above the five-year average. This information indicates that the supply of natural gas in the market is sufficient.
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