August Nymex natural gas (NGQ26) on Thursday closed down -0.066 (-2.26%).
Nat-gas prices fell to a 2-month low on Tuesday and settled sharply lower after weekly nat-gas inventories rose more than expected. The EIA reported that nat-gas inventories increased by +41 bcf in the week ended July 10, above expectations of +39 bcf.
Nat-gas prices recovered from their worst level on Thursday amid an outlook for hot US weather, boosting nat-gas demand from electricity suppliers to power air-conditioning. The Commodity Weather Group on Thursday said forecasts shifted hotter, with above-average temperatures expected across the Upper Midwest through July 20.
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 Thursday was 112.0 bcf/day (+3.6% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 82.8 bcf/day (+3.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 17.2 bcf/day (-8.9% 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 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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