Natural-gas futures rose slightly Wednesday as traders watched weather forecasts and awaited Thursday's inventory report for more direction.
Natural gas for September delivery recently traded up 1.3 cents, or 0.3%, to $4.168 per million British thermal units on the New York Mercantile Exchange.
Scorching heat continues across south-central states, and some forecasts for the coming weeks were somewhat warmer, giving futures a small boost.
The Electric Reliability Council of Texas Inc., system operator for the state's bulk transmission grid, said Tuesday that it set a new electricity demand record and is expecting to break it again Wednesday.
The heat wave isn't as widespread, however, as one seen last month that pushed prices higher as more natural gas was needed to generate electricity to power air conditioners.
A break from above-normal temperatures is possible in the Midwest and East in the six- to 10-day forecast, but those areas could also warm up again in the 11- to 15-day forecast, Commodity Weather Group said.
Some economic concerns are weighing on the natural-gas market. Weak gross-domestic-product data last week and manufacturing data Monday "are drawing a picture from which there is scant evidence of economic growth, and thus expanding demand," said Kilduff Group energy analyst Mike Fitzpatrick in a note to clients.
The market is still facing a high level of production, at 69.22 billion cubic feet a day in May, according to the Energy Information Administration. EIA data released Tuesday show U.S. gas output in May fell slightly from April, but it also indicated that producers haven't curtailed drilling amid low natural-gas prices.
Some traders are waiting for more tropical activity to influence the market, but the latest storm isn't predicted to reach production in the Gulf of Mexico. Tropical Storm Emily is expected to weaken as it moves across the island of Hispaniola later Wednesday, the National Hurricane Center said.
Traders are now looking ahead to Thursday's storage data from the U.S. Energy Department, expected to be smaller than recent injections due to hot weather and the influence of Tropical Storm Don last week.
Last year, 29 billion cubic feet of natural gas was added to storage for the week.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.2625/MMBtu, according to IntercontinentalExchange, down 3.5 cents from Tuesday's average. Natural gas for Thursday delivery at Transcontinental Zone 6 in New York traded at $4.6200/MMBtu, down 7.9 cents from Tuesday.