August Nymex natural gas (NGQ26) on Tuesday closed up +0.007 (+0.24%).
Nat-gas prices settled slightly higher on Tuesday as they consolidated above Monday’s 2-month low. The outlook for cooler US temperatures is weighing on prices, as the cooler weather could reduce nat-gas demand from electricity suppliers to power air-conditioning. The Commodity Weather Group on Tuesday said forecasts shifted cooler, with below-average temperatures expected in the Southwest through July 23.
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 Tuesday was 112.1 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 80.9 bcf/day (+1.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 17.8 bcf/day (unchanged-w/w), according to BNEF.
Projections for higher US nat-gas production are negative for prices. Last 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 last 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.
Last 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 12, gas storage in Europe was 52% full, compared to the 5-year seasonal average of 68% 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 10 remained unchanged at 126 rigs, moderately below the 2.5-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.
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