U.S. natural gas reaches one-month high, driven by both high temperatures and recovery in LNG exports

⑴ U.S. natural gas futures extended their gains on Thursday, hovering near a one-month high. The September contract reached its highest level since late July during the session, as weather forecasts indicate temperatures will generally remain above normal before mid-September. Cooling degree days are significantly higher than the same period last year, and cooling demand from the power sector is providing strong support for gas prices. ⑵ On the export side, there is a concurrent recovery. After completing scheduled maintenance, intake at U.S. LNG export facilities has rebounded to near July levels, and a major export terminal in Texas is now operating close to full capacity. The recovery in overseas demand is giving additional upward momentum to domestic gas prices. ⑶ The market is awaiting the release of the U.S. Energy Information Administration's weekly storage report. Institutional surveys estimate that underground storage increased by about 2 billion cubic feet last week, which is below the five-year average for the same period, but above last year's level. If the actual injection volume deviates significantly from expectations, it could trigger sharp short-term price volatility. ⑷ On the supply side, average daily production in the lower 48 states has risen to about 11.14 billion cubic feet so far this month, surpassing the record high set in July. However, total demand has remained stable, so the rebalancing of supply and demand is still ongoing. ⑸ European natural gas prices fell back on Thursday as expectations of eased U.S.-Iran diplomatic tensions temporarily weighed on international gas prices. However, the U.S. domestic market remains driven by its own supply-demand dynamics. Fundamentals driven by high temperatures and the recovery in LNG exports are acting in concert, so the short-term price focus is expected to remain in a relatively strong range. Attention will continue on the inventory report's role in correcting market expectations.