Nat-Gas Prices Gain on Higher US LNG Exports

September Nymex natural gas (NGU26) closed up +0.034 (+1.24%) on Monday.

Nat-gas prices settled higher on Monday as increased flows to liquefied natural gas export terminals reduced US domestic supplies.  Estimated LNG net flows to US LNG export terminals on Monday were 18.0 bcf/day, the most in five days.

Gains in nat-gas prices were limited on Monday amid forecasts for cooler US weather, potentially reducing nat-gas demand from electricity providers to power air conditioning use.  The Commodity Weather Group said on Monday that forecasts shifted cooler, with normal seasonal weather expected across the eastern US through August 17.

Nat-gas prices tumbled to a 3.25-month nearest-futures (Q26) low last Wednesday as recent below-normal US temperatures have reduced air-conditioning demand and allowed nat-gas inventories to be rebuilt.

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 Monday was 112.5 bcf/day (+2.6% y/y), according to BNEF.  Lower-48 state gas demand on Monday was 78.7 bcf/day (+14.7% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Monday were 18.0 bcf/day (-0.8% 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 recently reported 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.

Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended July 24 rose by +28 bcf, less than expectations of +37 bcf but above the 5-year weekly average increase of +26 bcf.  As of July 24, nat-gas inventories were down -1.2% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of August 1, gas storage in Europe was 57% full, compared to the 5-year seasonal average of 74% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending July 31 was unchanged at 127 rigs, below the 3-year high of 134 rigs set in February 2026.