August Nymex natural gas (NGQ26) on Monday closed down -0.051 (-1.75%).
Nat-gas prices retreated on Monday and are just above last Thursday’s 2-month low. Prices are under pressure amid concern that a tropical depression will become Tropical Storm Bertha and disrupt liquefied natural gas (LNG) export facilities on the US Gulf Coast over the next several days, leading to reduced nat-gas exports and larger domestic supplies.
Losses in nat-gas prices accelerated on Monday amid forecasts of cooler US weather that could curb nat-gas demand from electricity suppliers to power air-conditioning. The Commodity Weather Group on Monday said that weather forecasts shifted cooler, with below-average temperatures expected in the Northeast through July 24.
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 Monday was 113.0 bcf/day (+3.9% y/y), according to BNEF. Lower-48 state gas demand on Monday was 78.4 bcf/day (+5.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 18.0 bcf/day (+0.5% 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.
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 reported on July 8 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.
Last 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 18, gas storage in Europe was 54% full, compared to the 5-year seasonal average of 69% 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 17 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. For more information please view the Barchart Disclosure Policy here.
