Hot US Weather Forecasts Lift Nat-Gas Prices

July Nymex natural gas (NGN26) on Thursday closed up +0.122 (+3.79%).

Nat-gas prices rallied to a 2.5-week high on Thursday and settled sharply higher on the outlook for hotter US weather, potentially boosting nat-gas demand from electricity providers to power air-conditioning.  The Commodity Weather Group on Thursday said above-average temperatures are expected across the Midwest and Northeast from June 30 to July 4.

Nat-gas prices briefly ticked lower on Thursday after weekly US gas storage levels rose more than expected. The EUA reported that nat-gas inventories rose by +76 bcf last week, above expectations of +69 bcf. 

US (lower-48) dry gas production on Thursday was 112.0 bcf/day (+3.4% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 72.9 bcf/day (-10.5% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Thursday were 19.1 bcf/day (+0.8% w/w), according to BNEF.

Projections for higher US nat-gas production are negative for prices.  On June 9, the EIA raised its forecast for 2026 US dry nat-gas production to 111.0 bcf/day from a May estimate of 110.6 bcf/day.

Nat-gas prices have medium-term support on the outlook for tighter global LNG supplies.  On March 19, Qatar reported “extensive damage” at the world’s largest natural gas export plant at Ras Laffan Industrial City.  Qatar said the attacks by Iran damaged 17% of Ras Laffan’s LNG export capacity, a damage that will take three to five years to repair.   The Ras Laffan plant accounts for about 20% of global liquefied natural gas supply, and a reduction in its capacity could boost US nat-gas exports.  Also, the closure of the Strait of Hormuz due to the war in Iran has sharply curtailed nat-gas supplies to Europe and Asia.

As a negative factor for gas prices, the Edison Electric Institute on Wednesday reported that US (lower-48) electricity output in the week ended June 20 fell -2.17% y/y to 89,351 GWh (gigawatt hours), although US electricity output in the 52 weeks ending June 10 rose +2.45% y/y to 4,347,841 GWh.

Thursday’s weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended June 19 rose by +76 bcf, above expectations of +69 bcf and above the 5-year weekly average of +75 bcf.  As of June 19, nat-gas inventories were down -2.2% y/y, and +5.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of June 23, gas storage in Europe was 47% full, compared to the 5-year seasonal average of 62% full for this time of year.

Baker Hughes reported last Thursday that the number of active US nat-gas drilling rigs in the week ending June 19 rose by +1 to 122 rigs, well below the 2.5-year high of 134 rigs set in February 2026.