August Nymex natural gas (NGQ26) on Tuesday closed up +0.020 (+0.62%).
Nat-gas prices pushed higher on Tuesday amid carryover support from a rally in European nat-gas prices to a 3-week high after a Qatari LNG gas carrier was attacked in the Strait of Hormuz. If European countries are unable to secure LNG supplies due to attacks on shipping in the Persian Gulf, they may seek additional US supplies, lowering US storage levels. Europe’s restocking season is underway, but its storage facilities are only about 50% full, well below the 65% seasonal average.
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 110.2 bcf/day (+1.7% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 75.3 bcf/day (-4.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 18.1 bcf/day (-7.6% 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 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.
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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