-- US natural gas futures were higher in midday trading on Monday, supported by cooler temperature forecasts that lifted near-term demand expectations, alongside a modest pullback in production.
The front-month Henry Hub contract rose 0.90% to $2.698 per million British thermal units, while the continuous contract gained 1.05% to trade at $2.702/MMBtu.
Futures started the week firmer as weekend weather model updates added incremental demand, while US natural gas dry production eased off recent highs. NRG Energy said output remained several billion cubic feet below record levels, though daily production slipped modestly late last week, providing additional price support.
Although broader energy markets saw some strength following geopolitical developments around the Strait of Hormuz over the weekend, the Wall Street Journal reported, citing Ritterbusch & Associates, that US natural gas prices were being driven more by the cooler weather outlook than by crude's rebound.
Weather trends across the Midwest and Northeast have turned colder since last week, reducing the bearish tone as national demand strengthened into the seasonal Apr. 25-May 2 window, which likely contributed to gains late last week and into the start of this trading week.
Fundamentally, the market remains shaped by storage and production dynamics. The US Energy Information Administration last week reported a 59 billion cubic foot storage build, pushing inventories to 7% above last year and 6% above the five-year average, reinforcing a generally bearish shoulder-season backdrop.
However, Ritterbusch noted that positioning has shifted more constructively, with the latest Commitment of Traders report showing a further increase in net short positions, placing the market in "decided bullish territory." The firm added that while the inventory surplus is expected to expand with upcoming EIA data, it "could be easily erased by a warmer-than-normal summer that appears quite possible given the volatility in the weather patterns seen in recent months."
On the demand side, LNG exports continue to provide a key offset. NRG said feedgas flows are holding near record levels at approximately 18.9 Bcf/d, helping cushion prices and limit downside pressure despite weak domestic consumption.