FINWIRES · TerminalLIVE
FINWIRES

US Natural Gas Update: Futures Fall as Cooler Forecasts Offset LNG Demand Recovery

By

US natural gas futures remained under pressure on Tuesday as cooler weather forecasts and expectations of softer power-sector demand offset support from a recovery in LNG consumption.

The front-month Henry Hub contract and the continuous contract both declined by 2.89% to $3.16 per million British thermal units.

Geopolitical risk premiums continued to fade after the US moved to ease sanctions on Iran, while President Donald Trump said the Strait of Hormuz would remain open to shipping, easing concerns about potential disruptions to global energy flows.

Commodity Weather Group forecasts now show below-average temperatures across parts of the Mid-Atlantic region from June 23-27, reducing expected cooling demand and weighing on natural gas prices.

Aegis Hedging said Boardwalk Pipeline's 1.16 billion cubic feet per day Kosci Junction project could enter service ahead of schedule, connecting new gas supplies to Southeast demand centers.

The firm also noted planned maintenance on pipelines serving Sabine Pass, Corpus Christi and Golden Pass LNG facilities in late June and July.

NRG Energy said demand has risen into the low 100 Bcf/d range amid warmer temperatures, while production remains above demand, narrowing the market's supply surplus.

Gas flows to LNG export terminals slipped to an estimated 19.1 billion cubic feet per day on Tuesday, down 1.4% from the prior week, leaving more supply available to the domestic market, according to BNEF.

BNEF noted Lower 48 dry gas production was estimated at 111.5 Bcf/d on Tuesday, up 3% from a year earlier, while total gas demand was projected at 72.8 Bcf/d, down 10.1% year over year.

Global gas prices remained supported after an explosion at Qatar's Ras Laffan industrial complex on Monday raised uncertainty over the restart of Persian Gulf gas production, while stronger Asian LNG demand increased competition for spot cargoes, according to Daniel Hynes, senior commodity strategist at ANZ Bank.

Related Articles

Commodities

US Rig Activity Holds Steady as Private Operators Expand Market Share, RBC Says

US drilling activity remained largely stable last week as operators maintained activity levels across major shale basins, RBC Capital Markets said in a Friday note.The Baker Hughes (BKR) US land rig count increased by one rig to 551. Rigs drilling for oil rose by one to 423, while rigs targeting natural gas also increased by one to 122, according to RBC.The Permian Basin held steady at 256 rigs, representing 61% of Lower 48 oil rigs and 46% of total US land rigs. Exxon (XOM) led operators with 34 rigs, followed by Devon (DVN) with 21 and Occidental (OXY) with 20.Private companies accounted for 43% of active Permian rigs, up from 42% a year earlier. Helmerich & Payne (HP) remained the leading contractor with 90 rigs, while Patterson-UTI (PTEN) and Nabors (NBR) operated 31 and 29 rigs, respectively.Eagle Ford activity remained unchanged at 44 rigs. ConocoPhillips (COP) operated seven rigs and EOG Resources (EOG) ran six, while private operators increased their share of active rigs to 45% from 42% a year ago.The Anadarko Basin added one rig over the week to reach 20. Continental remained the largest operator with eight rigs, followed by Mewbourne with seven, while private companies controlled 92% of active rigs.Haynesville drilling activity held steady at 55 rigs. Apex led operators with 13 rigs and Adamas followed with six, while private operators expanded their share to 73% from 66% a year earlier.Helmerich & Payne operated 11 rigs in Haynesville, ahead of ICD with nine, Precision Drilling (PDS) with eight and TG Natural Resources with six.Across the US market, private operators accounted for 57% of active rigs, up from 55% a year earlier. The six largest drilling contractors controlled 72% of active rigs nationwide.Oilfield services stocks fell 9.2% over the week as West Texas Intermediate crude dropped 13.1%. EFX-CA gained 1.6%, while SLB (SLB) and Nabors declined 14.1% and 14.6%, respectively, RBC said.

$BKR$COP$DVN$HP$NBR$OXY$PDS$PTEN$SLB$XOM
Commodities

US DOE Awards 500,000 Barrel SPR Crude Exchange to Vitol

The US Department of Energy awarded a contract covering 500,000 barrels under its Strategic Petroleum Reserve crude exchange program to commodity trader Vitol, according to award information released Monday.The award was made under a Request for Proposals seeking the exchange of up to 40 million barrels from the SPR.As of June 22, the Department of Energy said Vitol had been awarded a contract covering 500,000 barrels.The solicitation covers up to 40 million barrels of sour crude from the Strategic Petroleum Reserve's Bryan Mound and Big Hill sites. The DOE said offers will compete on overall value to the government.DOE plans to supply 8 million barrels from Bryan Mound in July 2026 and another 7 million barrels in September 2026. Both exchange programs require a minimum return volume of 3 million barrels per month.At Big Hill, DOE is offering 11 million barrels in August 2026 and 14 million barrels in September 2026. The associated return periods begin in 2027 and extend into 2028, according to the department.DOE said bidders are responsible for securing sufficient pipeline and terminal capacity, adding that lower inventory levels could reduce delivery rates and require buyers to manage any resulting logistical constraints.DOE said Strategic Petroleum Reserve crude includes a blend of domestic and international grades, including Isthmus, Urals, Alaskan North Slope, Arabian Light, Saharan and Dubai crude streams.The agency requires returned crude to meet quality specifications and reserves the right to reject barrels that fail compatibility standards. Offerors must submit quality information 90 days before the return period begins.DOE said that oils with elevated light-end gas content or vapor pressure could affect storage integrity and limit the reserve's ability to deliver oil when needed.The minimum offer size stands at 3 million barrels for both pipeline and vessel deliveries. DOE said awards to a single bidder generally will not exceed 20 million barrels unless additional volumes remain available.The notice did not disclose financial terms or delivery schedules for the Vitol award, nor did it mention whether additional awards may be made under the solicitation.

Commodities

US Natural Gas Update: Futures Edge Up on Hotter Early July Forecasts

US natural gas futures continued to decline from earlier highs but managed to remain in positive territory in after-hours trade on Monday, despite forecasts for hotter weather across much of the country that point to stronger demand.The front-month Henry Hub contract and the continuous contract rose by 0.15% to $3.238 per million British thermal units.Barchart said natural gas prices rallied to a three-week high in the nearest futures contract on Monday as weather forecasts signaled increased cooling demand. It cited the Commodity Weather Group on Monday, which said above-average temperatures are expected across most of the US from July 2-6.Forecasts also indicate Lower 48 population-weighted temperatures are expected to rise above the 10-year seasonal average during the first week of July after generally below-average temperatures prevailed through much of June, Aegis Hedging said Monday.Warmer summer weather typically increases electricity demand for air conditioning, boosting natural gas consumption by power generators.On the supply side, US dry gas production remained steady at a robust 109.5 billion cubic feet per day, Aegis said, citing data from S&P. Barchart, citing BNEF data, said Lower 48 dry gas production on Monday was 109.6 Bcf/d, up 1.5% from a year earlier.Regarding demand, BNEF said US gas demand on Monday totaled 71.0 Bcf/d, down 2.0% from a year earlier. Celsius Energy said power burn on June 20 was 34.2 Bcf/d, down 2.5 Bcf/d from the previous day and down 1.2 Bcf/d from the same day last year.Over the preceding seven-day period, natural gas accounted for 39% of the fuel mix, up 1 percentage point from a year earlier, according to Celsius Energy. The week ending June 20 saw power burn average 35.8 Bcf/d, down 1.7 Bcf/d from the comparable period a year ago.Meanwhile, estimated LNG net flows to US LNG export terminals were 19.3 Bcf/d on Monday, up 0.9% from the prior week, according to BNEF. Feedgas volumes have remained mainly above 19 Bcf/d since June 14 as the maintenance schedules among LNG facilities on the US Gulf Coast wind down.On the export side, Gelber & Associates said Europe, the primary destination for US LNG, continues to show strong demand and is currently experiencing a heatwave of undetermined duration.Looking ahead at the US market, Gelber & Associates said: "For now, July appears to be building a firmer base above $3.00, but a sustained move higher likely needs heat to keep expanding across major load centers and storage injections to come in lighter than expected over the next couple of reports."