Futures for August delivery natural gas on the New York Mercantile Exchange settled slightly higher on Tuesday, closing up 0.24% after trading above Monday’s two-month low. The modest gain reflected a market consolidation following recent weakness, even as weather and supply signals pulled in different directions—supporting near-term demand expectations while medium-term views continued to weigh on prices.
At the same time, data points across production, consumption, and LNG exports showed the U.S. natural gas balance remains closely watched by traders as they gauge whether upcoming seasonal demand will be strong enough to absorb supply.
Key takeaways
- Price move: August natural gas futures rose 0.24% to finish the session slightly higher.
- Catalyst: Traders pointed to consolidation above Monday’s two-month low alongside weather forecasts calling for cooler conditions in parts of the U.S.
- Demand pressure: The market also weighed expectations for warmer-than-normal temperatures later this year that could reduce heating demand.
- Supply signals: U.S. production and inventory levels suggested adequate supply, limiting how far prices could run.
- Export support: Longer-horizon concerns about global LNG supply, tied to damage at Qatar’s Ras Laffan, offered medium-term support.
What drove the move
According to Commodity Weather Group forecasts cited in Tuesday’s market coverage, outlook for cooler U.S. temperatures in coming weeks weighed on natural gas demand expectations—but in the near term it also provided a reason for prices to hold. The group said forecasts shifted cooler, with below-average temperatures expected in the Southwest through July 23.
Cooler weather can lower the demand gas-fired power plants see from air-conditioning loads, which can be a headwind for prices. Even so, analysts framed Tuesday’s price action as consolidation—natural gas stabilizing after falling to a two-month low on Monday—rather than a fresh selloff.
In the background, traders continued to monitor the longer-term weather debate. The article noted speculation that a powerful El Niño could bring warmer-than-normal temperatures to the Northern Hemisphere in the fall and winter, a scenario that typically reduces heating demand and can be bearish for natural gas futures.
Supply, demand, and LNG flows in the latest data
Tuesday’s balance-of-supply indicators further shaped the day’s tone. According to BNEF data referenced in the report, U.S. (lower-48) dry gas production was 112.1 bcf/day, up 3.7% year over year. The same source put lower-48 state gas demand at 80.9 bcf/day, up 1.9% year over year.
On the export side, the report said estimated LNG net flows to U.S. export terminals were 17.8 bcf/day, unchanged from the prior week. For traders, steadier LNG flows can reduce the urgency of tightening the U.S. supply picture—particularly when domestic storage and production indicators suggest supply remains sufficient.
The market also reflected ongoing expectations for higher output. The report cited an EIA move last Tuesday that raised its forecast for 2026 U.S. dry natural gas production to 111.2 bcf/day from 111.0 bcf/day in a June estimate. Even small upward revisions can matter when the forward curve already reflects a supply outlook that may limit sustained price strength.
Inventories and rig activity keep prices range-bound
Weekly inventory information added another layer of caution. The report described EIA data for the week ended July 3 as bearish for natural gas prices, noting inventories rose by 61 bcf—right in line with expectations and above the 5-year weekly average of 51 bcf. It also stated that, as of July 3, inventories were down 0.8% year over year but still 6.6% above the 5-year seasonal average, pointing to adequate supply relative to typical seasonal levels.
On the international side, the article referenced European storage at 52% full as of July 12, compared with a 5-year seasonal average of 68% full for this time of year. While a fuller European balance would typically support demand for LNG and pipeline gas, the cited level implied storage was still below the historical norm—an element traders may use to gauge global gas tightness over time.
Production intentions also remained stable. Baker Hughes data cited in the report said active U.S. natural gas drilling rigs for the week ending July 10 were unchanged at 126 rigs, moderately below a 2.5-year high of 134 rigs set in February 2026.
What could support prices later
Despite near-term pressure from weather and supply adequacy, the report highlighted a medium-term support driver tied to global LNG risk. According to the coverage, Qatar reported “extensive damage” at its Ras Laffan Industrial City export facility on March 19, stating that attacks by Iran damaged 17% of Ras Laffan’s LNG export capacity. The damage, Qatar said, is expected to take three to five years to repair. The Ras Laffan plant is described as accounting for about 20% of global LNG supply, so a sustained reduction in export capacity could boost demand for alternative supply sources—potentially supporting U.S. LNG exports and, by extension, U.S. natural gas prices.
Energy demand data also provided some offset on the power-sector side. The report noted the Edison Electric Institute said U.S. (lower-48) electricity output in the week ended July 4 rose 7.73% year over year to 100,996 GWh. It added that electricity output in the 52 weeks ending July 4 rose 2.33% year over year to 4,345,875 GWh.
What to watch next
Investors are likely to focus next on upcoming weather updates that could shift expectations for air-conditioning demand and heating demand later in the year, along with additional weekly inventory prints from the EIA. With the report pointing to adequate U.S. storage relative to seasonal averages and steady LNG net flows, any surprise tightening—or a change in the weather outlook tied to El Niño—could be key to whether natural gas holds its gains or reverts toward recent lows.
