U.S. natural gas futures rose more than 2% on July 12 after touching their lowest in close to two-months earlier in the session, helped by forecasts for warmer than usual weather over the next two weeks than previously expected.

Warmer than normal weather triggers air conditioning demand. 

Front-month gas futures for August delivery on the New York Mercantile Exchange rose 5.3 cents, or 2.3%, to $2.32/MMBtu at 10:38 a.m. EDT. The contract dropped to its lowest since May 13 earlier in the session.

"We are trying to rebound on the expectations that the outlook going forward is going to be better," said Phil Flynn, an analyst at Price Futures Group, adding that, because of the potential demand destruction due to the storm Beryl and a bearish weekly inventory report that showed that production and supplies came in the higher than anticipated it's almost amazing that the market is holding up as well.

"On the flip side of that, there are some people that are calling for a return to some hot weather in the coming weeks and that may give the market some support."

Financial firm LSEG estimated 257 cooling degree days (CDDs) over the next two weeks in the Lower 48 U.S. states, slightly higher from the 252 CDDs estimated on Thursday. The normal is 204 HDDs for this time of year.

LSEG forecast average gas demand in the Lower 48, including exports, at 107.1 billion cubic feet per day (Bcf/d) this week, before easing to 106.2  Bcf/d next week.  

LSEG said gas output in the Lower 48 has risen to an average of 102.1 Bcf/d in July, up from an average of 100.2  Bcf/d in June and a 17-month low of 99.5  Bcf/d in May. U.S. output hit a monthly record high of 105.5  Bcf/d in December 2023.

Data from the U.S. Energy Information Administration on July 10 indicated that utilities added 65  Bcf of gas into storage during the week ended July 5. 

That was more than the 55- Bcf build analysts forecast in a Reuters poll and compares with an increase of 57  Bcf in the same week last year and a five-year (2019-2023) average rise of 57  Bcf for this time of year. 

That build boosted the amount of gas in storage to around 19% above normal levels for this time of year.

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