Nat-Gas Prices Supported by Stronger US LNG Exports

September Nymex natural gas (NGU26) closed up +0.022 (+0.83%) on Friday.

Nat-gas prices settled higher on Friday as stronger US nat-gas exports draw domestic supplies down. Estimated LNG net flows to US LNG export terminals on Friday were 18.6 bcf/day, the most in 4 weeks.

Forecasts for warmer US weather are also supportive of nat-gas prices, as hotter temperatures could boost nat-gas demand from electricity providers to power an expected increase in air conditioning use.  The Commodity Weather Group said on Friday that forecasts shifted warmer, with above-average temperatures expected across the Northeast and western US through August 12.

On Thursday, nat-gas prices tumbled to a 3.25-month nearest-futures low on a larger-than-expected storage build that pushed nat-gas inventories +6.7% above their 5-year seasonal average, a sign of robust supplies. 

Nat-gas prices also have some negative carryover from Tuesday when Energy Transfer announced that the Hugh Brinson pipeline will be able to operate at its full transportation capacity of 1.5 bcf/day by September 1, allowing more gas supplies to flow from the Permian Basin to the US benchmark Henry Hub in Erath, Louisiana, boosting US domestic supplies. 

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 112.3 bcf/day (+2.3% y/y), according to BNEF.  Lower-48 state gas demand on Friday was 82.7 bcf/day (+6.1% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Friday were 18.6 bcf/day (+4.3% 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 August 1 rose +0.9% y/y to 100,254 GWh (gigawatt hours).  Also, US electricity output in the 52 weeks ending August 1 rose +2.1% y/y to 4,350,538 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended July 31 rose by +33 bcf, above expectations of +30 bcf and above the 5-year weekly average increase of +23 bcf.  As of July 31, nat-gas inventories were down -0.4% y/y, and +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of August 4, gas storage in Europe was 58% full, compared to the 5-year seasonal average of 74% full for this time of year.

Baker Hughes reported on Friday that the number of active US nat-gas drilling rigs in the week ended August 7 fell by -3 to 124 rigs, modestly below the 3-year high of 134 rigs set in February 2026.