Natural gas prices surge on extreme heat and Hormuz disruption

Natural gas futures rose 3.22% on Sunday, August 9, closing at $2.758, as revised weather forecasts projecting extreme heat across the US Midwest and Northeast amplified expectations for power-sector gas consumption. The move triggered short-covering among institutional traders as the market repriced risk heading into late summer.tradingkey

Heat Forecasts and Tightening Supply

Updated meteorological models now project temperatures ranging from the upper 80s to 110 degrees Fahrenheit across much of the country over the next seven days, with the Northeast and West running above normal through August 12. A hotter revision centered on the Midwest and major Northeast cities has increased the likelihood of a downside surprise in Thursday's EIA storage report, which would further support prices.fxempire

On the supply side, Lower-48 dry gas production averaged about 110.6 Bcf per day in early August, barely off July's record. Despite a three-rig decline in the Baker Hughes gas rig count to 124, output remains near the top of its range. The Hugh Brinson pipeline reaching full capacity on September 1 will add 1.5 Bcf per day from the Permian to the Gulf Coast, though that arrives just as air-conditioning demand begins to taper. Storage inventories, while still above the five-year average, have seen the surplus narrow from 6.6% to 6.4%, removing a headwind that had weighed on prices.hellenicshippingnews+1

Global LNG Markets Add Pressure

The broader geopolitical backdrop continues to tighten global gas markets. Kpler Insight has revised its base case for the Strait of Hormuz to a "prolonged crisis" scenario, expecting LNG transit to remain severely constrained through the end of 2026. European TTF front-month prices settled at $20.91/MMBtu on July 22, up 15.1% week-over-week, while Asian spot LNG surged to $22/MMBtu as buyers competed for a shrinking pool of Atlantic Basin cargoes.hellenicshippingnews

US LNG exports totaled 10.48 million metric tons in July, with feedgas deliveries to terminals running between 16.23 and 16.53 Bcf per day. Freeport LNG remains offline for maintenance on one train, and Golden Pass continues operating below capacity. Despite these constraints, robust international demand is maintaining a structural floor under domestic prices.fxempire+1

ADNOC Bets on Long-Term Gas Expansion

Separately, ADNOC Gas awarded $8.2 billion in engineering, procurement, and construction contracts as part of the UAE's push to expand gas output and LNG exports, raising total investment plans to $28 billion through 2030. The contracts underscore the long-term supply investment thesis even as near-term markets tighten under the weight of Middle East disruptions and seasonal heat-driven demand.aa