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NEW YORK: US natural gas futures rose more than 3% on Wednesday, supported by a drop in output and forecasts of hotter weather for the second half of August that could boost cooling demand and increase gas consumption by power generators to meet air conditioning needs.

Front-month gas futures for September delivery on the New York Mercantile Exchange rose 7.1 cents, or about 3.3%, to settle at $2.219 per million British thermal units.

“We’ve had some moderation of weather models that have seemed to have reversed. We’re starting to add some cooling degree days to the second half of August. So, that’s been a bit of a help,” said Robert DiDona of Energy Ventures Analysis.

Financial firm LSEG estimated 224 cooling degree days (CDDs) over the next two weeks, slightly lower than the 233 CDDs estimated on Tuesday. The normal for this time of year is 186 CDDs.

LSEG forecast average gas demand in the Lower 48 US states, including exports, to rise from 105.9 billion cubic feet per day (bcfd) this week to 107.5 bcfd next week.

“All data vendors are showing that there has been decline over the past week in production and that has certainly tightened balances for the short term, which will mean that there’s less gas going into the ground during this injection season, and that has helped to create a little bit of upside,” DiDona said.

LSEG said gas output in the Lower 48 has fallen to an average of 102.6 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.

While the steady narrowing in the gas surplus will not cause a spike in prices independently on any given day or week, it will provide a bullish backdrop capable of accentuating price response to any unexpected supply disruptions or one more round of broad-based heat before this summer ends, energy advisory firm Ritterbusch and Associates said in a note.

Elsewhere, intense fighting between Ukrainian and Russian forces near a pipeline Russia uses to supply European countries with gas has not disrupted supplies, network operators and gas companies said on Tuesday.

Dutch and British gas wholesale prices were little changed on Wednesday morning amid flat demand and steady flows.

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