August Nymex natural gas (NGQ26) on Friday closed up +0.053 (+1.85%).
Nat-gas prices settled higher on Friday, garnering carry-over support from a sharp rally in European nat-gas prices to a 3.75-month high. Prices rallied on concern that escalation of the US-Iran conflict will keep the Strait of Hormuz closed, curb nat-gas supplies to Europe, and potentially prompt European LNG customers to boost purchases of US nat-gas to make up for lost Middle Eastern supplies.
Gains in nat-gas prices were limited on Friday amid cooler US weather forecasts that could potentially curb nat-gas demand from electricity suppliers to power air-conditioning. The Commodity Weather Group on Friday said forecasts shifted cooler, with below-average temperatures expected in the Southwest and Mid-Atlantic through July 26.
On Thursday, nat-gas prices fell to a 2-month low after weekly nat-gas inventories rose more than expected.
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 (+3.6% y/y), according to BNEF. Lower-48 state gas demand on Friday was 80.5 bcf/day (+1.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.1 bcf/day (+0.5% 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.
Thursday’s weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended July 10 rose by +41 bcf, below expectations of +39 bcf but below the 5-year weekly average of +45 bcf. As of July 10, nat-gas inventories were down -0.9% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 14, gas storage in Europe was 53% full, compared to the 5-year seasonal average of 68% 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 17 remained unchanged at 126 rigs, moderately below the 2.5-year high of 134 rigs set in February 2026.
