July Nymex natural gas (NGN26) on Tuesday fell -0.007 (-0.22%).
Nat-gas prices settled slightly lower on Tuesday but remained above Monday’s 1.5-week low. Forecasts of cooler US weather, which will reduce demand for air conditioning, are weighing on nat-gas prices. Forecaster Vaisala said cooler-than-normal temperatures are forecast across the Midwest and eastern US for June 14-18.
Projections for higher US nat-gas production are also negative for prices. On Tuesday, the EIA raised its forecast for 2026 US dry nat-gas production to 111.0 bcf/day from a May estimate of 110.6 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs posting a 2.5-year high in late February.
US (lower-48) dry gas production on Tuesday was 110.1 bcf/day (+2.2% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 73.2 bcf/day (+5.8% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 17.9 bcf/day (+8.7% w/w), according to BNEF.
The outlook for the Strait of Hormuz to remain closed for the foreseeable future is supportive of nat-gas prices, as the closure has curbed Middle Eastern nat-gas exports, potentially boosting US nat-gas exports to offset the shortfall.
Nat-gas prices have some 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, a 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. Also, the closure of the Strait of Hormuz due to the war in Iran has sharply curtailed nat-gas supplies to Europe and Asia.
As a positive factor for gas prices, the Edison Electric Institute last Wednesday reported that US (lower-48) electricity output in the week ended May 30 rose +6.4% y/y to 81,619 GWh (gigawatt hours), and US electricity output in the 52 weeks ending May 30 rose +2.18% y/y to 4,340,023 GWh.
Last Thursday’s weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended May 29 rose by +95 bcf, below expectations of +99 bcf and the 5-year weekly average of +101 bcf. As of May 29, nat-gas inventories were down -0.8% y/y, and +5.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of June 7, gas storage in Europe was 42% full, compared to the 5-year seasonal average of 57% 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 June 5 fell by -1 to 124 rigs, modestly below the 2.5-year high of 134 rigs set on February 27. In the past 19 months, the number of gas rigs has risen from the 4.75-year low of 94 rigs reported in September 2024.
