"We're getting a little bit of support on the weather and there is some tropical storm activity as well," which could impact some production, said Phil Flynn, senior analyst at Price Futures Group in Chicago. However, "this is the last gasp of the market moving higher ... production is going to continue to rise and demand is going to tail off here pretty shortly, so another retest of the lows before the end of the season (is possible)."
A low pressure system nearly 300 miles southeast of the North Carolina coast has an 90% chance of becoming a tropical cyclone over the next 48 hours, the US National Hurricane Center said. Meanwhile, Refinitiv data indicated 166 cooling degree days (CDDs) in the Lower 48 states over the next two weeks. The normal is 156 CDDs for this time of year.
CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses. Gas production in the Lower 48 US states rose to 92.1 bcfd on Sunday, Refinitiv data showed, near the all-time high of 92.5 bcfd scaled on last Monday.
Meanwhile, Enbridge Inc returned to service Line 25, one of two pipelines on its Texas Eastern natural gas system in Kentucky that was shut after an explosion on Aug. 1 The price support is "also likely in response to a pop in global risk appetite associated with (US President Donald) Trump's suggestion of renewed trade talks with China," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Analysts said gas futures had traded near multi-year lows since May because record output and mild spring weather allowed utilities to inject huge amounts of gas into storage. The amount of gas in inventory has, however, remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019.