Aided by hot temperatures in the forecast and an improved outlook for export demand, natural gas futures continued to build on their recent upward momentum in early trading Wednesday. The September Nymex contract was up 1.0 cent to $2.203/MMBtu at around 8:50 a.m. ET.

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The gains this week have occurred on a combination of rallying European prices, higher expectations for liquefied natural gas (LNG) export demand, warmer forecasts and lower-than-expected production to start the month, according to Genscape Inc. analyst Joe Bernardi.

“We are continuing to model a significant increase for August LNG demand compared to July,” Bernardi said.

NGI’s LNG Flow Tracker showed deliveries to U.S. LNG export terminals reaching 4.02 million Dth/d for Tuesday, a noticeable increase over deliveries hovering in the around 3-3.4 million Dth/d over the last several days of July.

As for the latest forecasts, Bespoke Weather Services has not made any changes to its gas-weighted degree day projections, although the firm noted declines in expected demand from both the American and European models.

“We had been leaning a little on the cooler side of the consensus already given that even when the pattern has been verifying hotter than normal models have often been shooting too high on temperatures,” Bespoke said. “The best heat relative to normal continues to show up in the northern half of the nation, consistent with the predominant pattern of the summer so far, with the South closer to normal.”

Fundamentals alone do not account for the recent surge in natural gas prices this week, even with the hotter forecast and improved outlook for LNG, according to the firm.

“This is simply the market accepting that containment risks are much lower than what was being priced in even as late as last week,” Bespoke said.

Meanwhile, looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 31 Bcf injection for the week ending July 31. The firm estimated a 5% week/week decline in population-weighted cooling degree days, lowering power burns by 0.6 Bcf/d week/week.

As of early Wednesday a Bloomberg survey showed median prediction for a 30 Bcf build, based on five estimates ranging from 28 Bcf to 33 Bcf. NGI’s storage model estimate predicted an injection of 30 Bcf.

The five-year average for the period is an injection of 33 Bcf; last year EIA recorded a 58 Bcf build for the similar week.

September crude oil futures were up $1.38 to $43.08/bbl at around 8:50 a.m. ET, while September RBOB gasoline was up about 4.0 cents to $1.2545/gal.