August Nymex natural gas (NGQ26) on Friday closed down -0.045 (-1.54%), falling back towards last week’s 2.25-month nearest-futures low.
Nat-gas prices fell back as US natural gas inventories remain well above the 5-year average and weather forecasts shifted a bit cooler. Commodity Weather Group is still forecasting above-average temperatures in the interior West through August 7, but lower temperatures than previously thought.
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 111.6 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Friday was 77.6 bcf/day (-6.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.2 bcf/day (+3.7% w/w), according to BNEF.
Projections for higher US nat-gas production are negative for prices. On July 7, 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.
As a positive factor for gas prices, the Edison Electric Institute reported on Wednesday that US (lower-48) electricity output in the week ended July 18 rose +2.0% y/y to 101,391 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending July 18 rose +2.3% y/y to 4,350,346 GWh.
Thursday's weekly EIA report was mixed for nat-gas prices, as nat-gas inventories for the week ended July 17 rose by +32 bcf, less than expectations of +34 bcf but above the 5-year weekly average increase of +30 bcf. As of July 17, nat-gas inventories were down -0.6% y/y, and +6.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 20, gas storage in Europe was 54% full, compared to the 5-year seasonal average of 70% 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 24 rose by +1 rig to 127 rigs, below the 3-year high of 134 rigs set in February 2026.
