FX.co ★ Natgas Futures Jumps as Summer Demand Heats Up

U.S. natural gas futures experienced a rise of over 2%, reaching above $3.4 per MMBtu on Wednesday. This increase halted a two-day decline, driven by forecasts of hotter mid-July temperatures, which are anticipated to lead to stronger demand for air conditioning. A less-than-expected inventory build and concerns over potential winter supply, particularly affecting January contracts, are identified as key factors for this upward trend. In the Lower 48 states, gas output dipped to 106.2 bcfd in early July, slightly lower than in June, while demand projections rose due to higher temperatures. Additionally, LNG exports fell to 14.4 bcfd in June, causing further supply constraints. Geopolitical dynamics continue to play a role in the market, notably with U.S. sanctions on Russia's Arctic LNG 2 project limiting exports, alongside former President Trump's calls for the EU to increase imports of U.S. LNG. Uncertainty regarding tropical storm activity, which has a dual impact on supply and demand, also contributed to market volatility.