US Nat-Gas Prices Dipped on Abnormally High Storage Levels

August Nymex natural gas (NGQ26) closed down -0.200 (-6.23%) on Thursday, settling at levels near a 1.5-month low. The Energy Information Administration (EIA) reported Thursday that weekly U.S. natural gas inventories rose by +61 billion cubic feet (bcf) for the week ended July 3, exceeding the five-year average increase of +51 bcf for the same period.

This surge in storage acted as a bearish pressure on prices, highlighting ample supply conditions. Meanwhile, U.S. (lower-48) dry gas production reached 113.5 bcf/day (+6.8% year-over-year) according to BNEF, while demand remained steady at 78.1 bcf/day (+0.1% y/y). LNG exports via U.S. terminals saw modest declines at 19.0 bcf/day (-1.0% week-to-week).

Longer-term bearish factors include forecasts of reduced heating demand from anticipated warmer temperatures linked to a potential El Niño event. Conversely, moderate price support stems from ongoing global LNG supply constraints, notably after Qatar’s Ras Laffan LNG plant sustained damage affecting 17% of its export capacity, with repairs expected to take three to five years.

Positive signals include increased electricity demand, with June’s reported 7.73% year-over-year rise in lower-48 electricity output to 100,996 GWh suggesting heightened industrial activity that could indirectly impact gas demand. However, active drilling rigs remained subdued at 126 rigs as of July 3—below February’s 2.5-year peak of 134 rigs, indicating limited near-term supply expansion.

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