Natural gas futures inched higher Monday, bolstered by a hotter-trending forecast for August and a tight storage picture. In the spot market, less intense heat in Southern California saw SoCal Citygate walk back from last week’s record-setting highs as the region continued to trade at a premium; the NGI National Spot Gas Average tacked on 3 cents to $2.73/MMBtu.

The September Nymex futures contract added 1.5 cents to settle at $2.797 Monday after trading as high as $2.814 and as low as $2.766. October added 1.7 cents to $2.817, while January climbed 1.8 cents to settle at $3.057.

The overnight weather data heading into Monday’s session leaned slightly cooler, but the midday data was hotter trending, “especially for next week, seeing a stronger ridge over the eastern half of the country,” according to NatGasWeather. “The data had been a little cooler trending around Aug. 9, seeing a weather system into the Midwest and Northeast, although, the more recent data isn’t as convincing as we see ways the hot ridge blocks any weather systems that try to dip down out of Canada.

“…Overall, we see the pattern trending from neutral to slightly bullish, and mainly due to further hotter trends over the eastern half of the country late this weekend into the following week,” the firm said. “Going forward, we expect the markets will be more sensitive to hotter trends over cooler trends, especially after two straight” bullish misses from the Energy Information Administration’s (EIA) weekly storage report “and due to deficits remaining hefty.”

Bespoke Weather Services noted “an intense burst of selling right at the settle” Monday that it said suggests the market may struggle to stay above $2.80 for the front month.

“However, we see both fundamentals and a strong strip as skewing risk higher over the next couple of days,” the firm said. “Production has rebounded over the past weekend, and presumably that played a role in limiting prices from breaking out…However, we also saw even tighter power burns over the weekend, indicating it was not non-linear demand growth from intense heat driving tightness but in fact structural tightness canceling out production growth.”

Afternoon model guidance showed additional heat in the medium- and long-range, with patterns pointing to cooling demand remaining “far above average” into mid-August, “exacerbating recent tightness and storage concerns,” Bespoke said.

Natural gas dry production increased to “back above 81 Bcf/d” last week, according to Drillinginfo, which noted declines in Texas, the Midcontinent and the Southeast, offset by gains in the Northeast and Rockies.

Last week’s 24 Bcf injection from EIA could turn out to be the lowest build of the summer, according to the firm, which said it expects larger injections for the next two reports.

“Prices remain in the historical seasonal negative bias,” Drillinginfo said. “The September contract has traded lower in August than the July low for 10 of the last 11 years. With prices showing strength at the end of last week, they may open this week and challenge the highs of last week ($2.831) and the 200-day moving average ($2.857).

“This higher price is historically normal for the September contract. As the fundamental picture becomes clearer…the likelihood of historical precedence is expected to take prices lower.”

Turning to the spot market, SoCal Citygate spot prices eased somewhat amid more moderate demand expectations as continued hot temperatures in the region kept points in and around Southern California trading at an elevated basis Monday.

SoCal Citygate gave up 42 cents to average $8.22 as utility Southern California Gas Co. (SoCalGas) was forecasting demand on its system of around 2.4-2.5 million Dth/d over the next several days, with receipts expected to approach 2.6 million Dth/d.

During last week’s heat wave, when SoCal Citygate prices shot up to nearly $40 amid a confluence of infrastructure constraints and higher gas-fired electricity demand, SoCalGas system demand had totaled a little over 3 Bcf/d, according to estimates from Genscape Inc.

Elsewhere in the region, SoCal Border Average added 41 cents to $4.19, while El Paso S. Mainline/N. Baja surged $1.24 to $4.47.

Radiant Solutions was forecasting highs in Burbank, CA, to reach the mid-90s over the next several days, not quite as intense as last week’s triple-digit heat but still about 7-8 degrees warmer than normal.

Intercontinental Exchange next-day power indices Monday showed peak electricity prices in SP15 and Palo Verde down slightly but still near $100/MWh.

In the Midcontinent, ANR Southwest fell 18 cents to $2.27, while NGPL Midcontinent dropped 5 cents to $2.40.

“NGPL declared a force majeure to begin Wednesday that will restrict northbound operational capacity to around 580 MMcf/d through Segment 11 in NGPL’s Midcontinent Zone,” Genscape Inc. analyst Vanessa Witte said Monday. “Remediation work to resolve a discovered anomaly between compressor stations 104 and 105 in Kansas is expected to last through the end of the month.

“Flows on Segment 11 feed the Midwest area via the Amarillo Line. Nominations through Segment 11 taken from ”Sta 103 to 106’ have averaged roughly 966 MMcf/d since the beginning of July.”

A maintenance event in June similarly reduced capacity through NGPL’s Segment 11 to around 580 MMcf/d, according to Witte.

“During that time, nominations decreased correspondingly and averaged only 448 MMcf/d,” Witte said. “Downstream Chicago Citygate basis prices averaged around negative 18 cents, about 3 cents stronger than the month-to-date average leading up to that event.”

On Monday Chicago Citygate added 4 cents to average $2.69, shrinking its differential to Henry Hub, which dropped 2 cents to $2.76.

Points across the Northeast pulled back a few cents Monday after widespread declines on Friday.

Algonquin Citygate tacked on 5 cents to $2.84 as Radiant was forecasting highs in Boston in the low 80s Tuesday, climbing into the mid to upper 80s later in the week.