Natural Gas Futures Edge Up Amid European Price Surge

August Nymex natural gas (NGQ24) closed Tuesday up 0.030, or 1.39%.

August natural gas prices settled moderately higher on Tuesday, with short covering boosting futures after a carryover lift from a 4% rally in European gas prices to a one‑week peak. Weather outlook remains mixed: NatGasWeather forecast very warm conditions across the U.S. West, South, and East from July 23‑31, while the central states are expected to see seasonal temperatures.

On Monday, natural gas slipped to a 2¼‑month low as cooler‑weather forecasts pointed to reduced air‑conditioning demand. Meanwhile, U.S. gas supplies remain ample, with inventories as of July 5 sitting 18.7% above the five‑year seasonal average.

Support for natural gas persists from the prospect of hot U.S. temperatures this summer, which could lift electricity‑sector demand for air‑conditioning. The National Weather Service noted on June 11 that most of the lower 48 states are likely to experience above‑average temperatures over the next three months, with a hotter‑than‑normal summer being the most likely outcome for many regions.

According to BNEF, Lower‑48 dry gas production on Tuesday was 100.4 bcf/day, down 0.3% year‑over‑year, while gas demand reached 82 bcf/day, up 9.1% year‑over‑year. LNG net flows to U.S. export terminals stood at 10.7 bcf/day, a 4.0% week‑over‑week decline.

The Edison Electric Institute reported that U.S. electricity output for the week ending July 6 rose 2.9% year‑over‑year to 92,792 GWh, and the 52‑week total through that date increased 2.1% year‑over‑year to 4,146,741 GWh—both positive signals for natural‑gas demand from utilities.

The weekly EIA report released last Thursday proved bearish for natural gas, showing a build of 65 bcf for the week ended July 5, exceeding both the forecast of 58 bcf and the five‑year average build of 57 bcf. As of July 5, inventories were up 9.2% year‑over‑year and 18.7% above the five‑year seasonal average, indicating ample supply. In Europe, gas storage stood at 80% full on July 8, well above the five‑year average of 70% for the period.

Baker Hughes said the active U.S. natural‑gas rig count dropped by one to 100 rigs for the week ending July 12, just above the 2¾‑year low of 97 rigs recorded in late June. The rig count has been declining after peaking at 166 rigs in September 2022, far above the pandemic‑era trough of 68 rigs in July 2020 (data since 1987).

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