en.Wedoany.com Reported - July New York Mercantile Exchange (Nymex) natural gas futures (NGN26) fell $0.107 (-3.21%) on Friday, driven by ample U.S. inventories and reduced flows to export terminals, further boosting domestic supply. As of May 29, natural gas inventories were 5.7% above the five-year seasonal average, indicating ample supply. Meanwhile, net flows to U.S. liquefied natural gas (LNG) export terminals were slightly above 17.0 billion cubic feet per day, near the lowest level in over two weeks, as seasonal maintenance continues to limit exports, further increasing domestic supply.
Expectations of hot weather in the U.S. provided support for natural gas prices. The Commodity Weather Group noted that U.S. weather forecasts have turned hotter, with temperatures expected to be above average in the Midwest and Northeast through June 14, potentially prompting power suppliers to increase natural gas demand to meet anticipated higher air conditioning usage. Additionally, the prospect of a prolonged closure of the Strait of Hormuz in the foreseeable future also supported prices, as the closure curbs Middle Eastern natural gas exports and could boost U.S. natural gas exports to fill the gap.
According to BloombergNEF (BNEF) data, dry natural gas production in the U.S. Lower 48 states was 110.4 billion cubic feet per day on Friday (up 1.7% year-over-year); demand was 70.6 billion cubic feet per day (down 2.0% year-over-year). Net flows into LNG export terminals were 17.2 billion cubic feet per day (down 5.8% month-over-month). Rising expectations for U.S. natural gas production are bearish for prices. On May 12, the U.S. Energy Information Administration (EIA) raised its 2026 U.S. dry natural gas production forecast to 110.61 billion cubic feet per day from the April estimate of 109.60 billion cubic feet per day. Current production is near historical highs, and the number of active U.S. natural gas drilling rigs hit a 2.5-year high in late February.
In the medium term, the prospect of tightening global LNG supply provides support for natural gas prices. On March 19, Qatar reported "extensive damage" to the world's largest natural gas export plant in Ras Laffan Industrial City, with an Iranian attack destroying 17% of the plant's LNG export capacity, requiring three to five years for repairs. The plant accounts for approximately 20% of global LNG supply, and reduced capacity could boost U.S. natural gas exports. Meanwhile, the closure of the Strait of Hormuz due to the Iran war has significantly reduced natural gas supplies to Europe and Asia.
On the demand side, the Edison Electric Institute reported that for the week ending May 30, power generation in the U.S. Lower 48 states was up 6.4% year-over-year to 81,619 GWh; over the 52 weeks ending May 30, generation was up 2.18% year-over-year to 4,340,023 GWh. The EIA's weekly report was bullish for prices, with natural gas inventories increasing by 95 billion cubic feet for the week ending May 29, below the expected 99 billion cubic feet and the five-year weekly average of 101 billion cubic feet. Inventories were down 0.8% year-over-year and 5.7% above the five-year seasonal average, indicating ample supply. As of June 3, European natural gas storage facilities were 41% full, below the five-year seasonal average fill rate of 56%. On the supply side, Baker Hughes reported that for the week ending June 5, the number of active U.S. natural gas drilling rigs decreased by 1 to 124, slightly below the 2.5-year high of 134 in late February. Over the past 19 months, this number has risen from a 4.75-year low of 94 reported in September 2024.
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