US natgas prices gain over 2% on higher demand forecasts, rising oil futures

U.S. natural gas futures rose to a near one-week high on Wednesday, supported by summer cooling demand and gains in oil prices, while investors awaited a federal storage report due this week.

Front-month gas futures for August delivery NGc1 on the New York Mercantile Exchange settled 6 cents, or 2.1% higher, at $2.925 per million British thermal units (mmBtu). The U.S. Energy Information Administration's weekly gas storage report is due on Thursday.

"We've got the summer weather across most of the country, and that's keeping natural gas demand for air conditioning. Technically, the prices are a little on the oversold condition, meaning we could see a kind of a technical rally," said Thomas Saal, senior vice president for energy trading at StoneX Financial.

Meteorologists forecast mostly warmer-than-normal temperatures through August 5, with power generators burning lots of gas to keep air conditioners humming. About 40% of U.S. power generation comes from gas-fired plants.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise slightly from 110.1 bcfd this week to 110.2 bcfd next week. The forecast for this week was lower than LSEG's outlook on Friday.

Oil prices rose to their highest in almost six weeks, with Brent crude surpassing $95 a barrel, on mounting concerns about disruptions to Middle East supply routes because of escalating hostilities between the U.S. and Iran and threats to shipping by the Iran-backed Houthi militia in Yemen. O/R