US natural gas futures extended earlier declines in midday trading as renewed focus on a domestic supply surplus offset volatility triggered earlier in the week by geopolitical headlines surrounding the lack of progress in opening the Strait of Hormuz.
The front-month Henry Hub contract and the continuous contract both fell 3.33% to $2.814 per million British thermal units.
Market participants pointed to a softer demand profile as a key near-term driver. US gas consumption eased to 98.7 billion cubic feet per day from 105 Bcf/d last week amid milder weather conditions, according to NRG Energy. The decline in heating and cooling loads added to already ample storage expectations.
Weather outlooks, however, remain mixed. The US National Weather Service is forecasting above-normal temperatures for May 19-25, which could lift power burn demand as cooling needs rise.
The US Energy Information Administration's latest Short-Term Energy Outlook projects electricity demand growth of 1.3% in 2026 to nearly 4,250 billion kilowatt-hours, accelerating to a 3.1% increase in 2027. The agency also noted a structural shift, with commercial sector demand expected to outpace residential consumption for the first time on record by 2027.
On the supply side, US dry gas production rose 4% over the year to 120.2 Bcf/d in Q1, with further growth expected through 2027. Output gains are being led by the Permian and Haynesville basins, where production is forecast to rise around 6%.
The EIA also revised its production outlook higher by 1% for 2026 and 2% for 2027, citing stronger crude prices and rising gas-to-oil ratios in the Permian Basin.
Daily output was estimated at roughly 107.2 Bcf/d on Tuesday, NRG said.
LNG flows are also shaping near-term balances. US LNG export capacity increased by 0.9 Bcf/d in April, supported by start-ups including Golden Pass Train 1 and Corpus Christi Stage 3. A further 0.2 Bcf/d from Corpus Christi Train 6 is expected this summer.
Despite rising capacity, actual feedgas deliveries were running at around 17 Bcf/d on Tuesday, below nameplate levels due to scheduled maintenance, NRG said. The temporary slowdown in export flows is effectively redirecting supply back into the domestic market, adding to inventories and weighing on prices.