US natural gas prices, tracked by the United States Natural Gas Fund LP UNGare on track to extend their winning streak to four sessions on Friday as the combination of lower-than-expected inventories and increased demand due to persistent heat reversed the bearish trend that has dominated the market since June.

Henry Hub front-month futures rose 1.3 percent to $2.15 per million British thermal units (MMBtu), setting the stage for the highest closing price since July 23.

Jodi ShaftoEditor and senior natural gas reporter at NatGas Intelnoted that natural gas prices had room to rise during the August 1-8 trading period. “Against a backdrop of solid demand, possible production cuts and potentially modest storage injections in August, natural gas futures prices rose,” Shafto wrote.

On Thursday, US Energy Information Administration (EIA) reported injections of 21 billion cubic feet (Bcf) into natural gas storage facilities for the week ending August 2. The figure was slightly below market expectations and well below the five-year average of 38 Bcf. The modest increase pushed total inventories to 3,270 Bcf, which is 248 Bcf above the year-ago level and 424 Bcf above the five-year average.

Despite the increased storage capacity, gas storage levels were 14.9 percent above the five-year average, according to the report – a decrease from the increase of 39 percent in March and 19 percent in June.

NatGas Intel highlighted the market’s positive response to the below-average increase, stressing that supply remains a key focus for traders and expects weak production to continue to boost prices going forward.

In response to a nearly 40% drop in natural gas prices over the past two months, major U.S. producers plan to further cut production in the second half of 2024.

EQT Corp. EQTthe largest natural gas producer in the 48 southern states, together with For more information: Chesapeake Energy Corp. CHCannounced that they would wait for a price recovery before expanding production.

However, Eli Rubina senior analyst at EBW Analytics Group, commented: “Production cuts due to low prices are more ‘less pessimistic’ than ‘obviously optimistic’ as the market tries to get a handle on oversupply.” While production cuts could help balance the market, they may not necessarily lead to a significant increase in prices.

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Despite the recent trend toward milder weather, the weather outlook for natural gas prices remains favorable, according to NatGasWeather.

“Short-term forecasts indicate lower temperatures across the Midwest and Eastern U.S. over the next seven days, with widespread rain expected due to the remnants of former Hurricane Debby. While highs of 70-80 degrees Fahrenheit are forecast for these regions, hotter conditions are expected in the western and southern parts of the country, with temperatures ranging from 80-100 degrees Fahrenheit,” the company wrote.

NatGasWeather also noted that the oppressive heat is not over for long in much of the country. Although fewer days of cooler temperatures are expected, overall weather conditions for the eight- to 15-day period remain optimistic and could continue to support natural gas prices.

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This image was created using the artificial intelligence MidJourney.