Extreme Heat Seen Bringing Demand Upside as Natural Gas Futures Rally Ahead of EIA Data

With searing summer heat building in updated forecasts, natural gas futures probed higher early Thursday ahead of the release of the latest weekly government inventory data.

The August Nymex contract was up 9.7 cents to $2.700/MMBtu at around 8:40 a.m. ET.

EBW Analytics Group in a note to clients early Thursday highlighted continued “slow-but-steady” gains in cooling degree day (CDD) expectations from recent forecasting for late July into early August. 

As temperatures reach extremes, there exists upside potential for natural gas power burns that may not be reflected in the MWh-to-Bcf correlations during more moderate summer conditions, EBW analyst Eli Rubin said.

“During periods of extreme heat, power burn modeling often struggles, as the most inefficient natural...