U.S. natural gas futures rose more than 4% to nearly a two-week high on Aug. 7 on forecasts for higher demand over the next week because of hotter-than-expected weather through mid-August, especially in Texas.

Front-month gas futures for September delivery on the New York Mercantile Exchange were up 12.4 cents, or 4.8%, to $2.70 per million British thermal units (MMBtu) at 10:49 a.m. EDT (1449 GMT), its highest since July 26.

"We're getting a little bit of a bounce to start the week on the hot temperatures," said Phil Flynn, an analyst at Price Futures Group.

Power demand in Texas hit an all-time high last week and will likely break that record again this week as homes and businesses keep their air conditioners cranked up during the lingering heat wave, according to forecasts by the Electric Reliability Council of Texas (ERCOT), the state's power grid operator.

Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.

Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Aug. 19.

Data provider Refinitiv forecast U.S. gas demand, including exports, would rise from 102.4 Bcf/d this week to 105.8 Bcf/d next week as power generators burn more of the fuel and exports rise.

Refinitiv said average gas output in the U.S. Lower 48 states was 102.2 billion cubic feet per day (Bcf/d) so far in August, up from 101.8 Bcf/d in July and matching the monthly record in May.

Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 Bcf/d in July to 12.3 Bcf/d so far in August due mostly to a reduction at Cheniere Energy's Sabine Pass in Louisiana. That compares with a monthly record of
14.0 Bcf/d in April.

The U.S. is on track to become the world's biggest LNG supplier in 2023 - ahead of recent leaders Australia and Qatar - as much higher global prices continue to feed demand for U.S. exports due to supply disruptions and sanctions linked to the war in Ukraine.

In 2022, roughly 69%, or 7.2 Bcf/d, of U.S. LNG exports went to Europe as shippers diverted cargoes from Asia to get higher prices. In 2021, when prices in Asia were higher, just 35%, or about 3.3 Bcf/d, of U.S. LNG exports went to Europe.

With the return of higher gas prices in Asia this year, analysts said they expect U.S. LNG exports to Asia will increase. But that has not happened yet. Just 19%, or 2.1 Bcf/d, of U.S. LNG exports went to Asia during the first half of 2023, while 70%, or 8.0 Bcf/d, went to Europe.