Nat-Gas Prices Fall on Cooler Weather and Ample Supplies

August Nymex natural gas (NGQ26) on Friday closed down -0.072 (-2.39%).

Nat-gas prices added to Thursday’s losses on Friday and posted a 1.5-month low.  Nat-gas prices are under pressure as US weather forecasts shifted to show cooler weather in the coming weeks, which could potentially curb demand for gas-fired electricity as consumers use less air conditioning.  Nat-gas prices also fell on abundant US supplies after Thursday’s weekly EIA report showed that US nat-gas inventories were +6.6% above their five-year average as of July 3. 

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 112.6 bcf/day (+5.2% y/y), according to BNEF.  Lower-48 state gas demand on Friday was 77.7 bcf/day (+0.6% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Friday were 18.2 bcf/day (-5.2% w/w), according to BNEF.

Projections for higher US nat-gas production are negative for prices.  On Tuesday, 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.

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 positive factor for gas prices, the Edison Electric Institute on Wednesday reported that US (lower-48) electricity output in the week ended July 4 rose +7.73% y/y to 100,996 GWh (gigawatt hours).  Also, US electricity output in the 52 weeks ending July 4 rose +2.33% y/y to 4,345,875 GWh.

Thursday’s weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended July 3 rose by +61 bcf, right on expectations and above the 5-year weekly average of +51 bcf. As of July 3, nat-gas inventories were down -0.8% y/y, and +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of July 8, gas storage in Europe was 51% full, compared to the 5-year seasonal average of 66% 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 10 remained unchanged at 126 rigs, moderately below the 2.5-year high of 134 rigs set in February 2026.