August Nymex natural gas (NGQ26) on Monday closed up +0.049 (+1.53%).
Nat-gas prices settled higher on Monday amid speculation that the recent heatwave that engulfed over two-thirds of the US sparked heavy demand for nat-gas from electricity providers to power the surge in air-conditioning usage, which also drew down domestic nat-gas storage levels. According to BNEF data, last Wednesday’s and Thursday’s domestic nat-gas demand jumped to a 3-month high.
The upside in nat-gas prices appears limited in the near term amid prospects of reduced air-conditioning demand due to forecasts of cooler US weather. The Commodity Weather Group on Monday said forecasts shifted to show cooler weather in the eastern half of the US through July 15.
US (lower-48) dry gas production on Monday was 109.8 bcf/day (+1.8% y/y), according to BNEF. Lower-48 state gas demand on Monday was 76.9 bcf/day (+6.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 19.2 bcf/day (+1.1% 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, 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.
As a negative factor for gas prices, the Edison Electric Institute last Wednesday reported that US (lower-48) electricity output in the week ended June 27 fell -8.27% y/y to 91,142 GWh (gigawatt hours). However, US electricity output in the 52 weeks ending June 27 rose +2.18% y/y to 4,339,625 GWh.
Last Thursday’s weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended June 26 rose by +87 bcf, above expectations of +84 bcf and above the 5-year weekly average of +64 bcf. As of June 26, nat-gas inventories were down -1.0% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 4, gas storage in Europe was 50% full, compared to the 5-year seasonal average of 65% 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 July 3 rose by +1 to 126 rigs, moderately below the 2.5-year high of 134 rigs set in February 2026.
