August Nymex natural gas (NGQ26) on Friday closed down -0.045 (-1.54%), falling back towards last week’s 2.25-month nearest-futures low.
Nat-gas prices fell back as US natural gas inventories remain well above the 5-year average and weather forecasts shifted a bit cooler. Commodity Weather Group is still forecasting above-average temperatures in the interior West through August 7, but lower temperatures than previously thought.
A bearish factor for nat-gas prices in the medium term is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing nat-gas heating demand.
US (lower-48) dry gas production on Friday was 111.6 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Friday was 77.6 bcf/day (-6.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.2 bcf/day (+3.7% w/w), according to BNEF.
Projections for higher US nat-gas production are negative for prices. On July 7, the EIA raised its forecast for 2026 US dry nat-gas production to 111.2 bcf/day from a June estimate of 111.0 bcf/day.
As a positive factor for gas prices, the Edison Electric Institute reported on Wednesday that US (lower-48) electricity output in the week ended July 18 rose +2.0% y/y to 101,391 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending July 18 rose +2.3% y/y to 4,350,346 GWh.
Thursday's weekly EIA report was mixed for nat-gas prices, as nat-gas inventories for the week ended July 17 rose by +32 bcf, less than expectations of +34 bcf but above the 5-year weekly average increase of +30 bcf. As of July 17, nat-gas inventories were down -0.6% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 20, gas storage in Europe was 54% full, compared to the 5-year seasonal average of 70% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending July 24 rose by +1 rig to 127 rigs, below the 3-year high of 134 rigs set in February 2026.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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