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US Natural Gas Update: Futures Fall as Easing US-Iran Tensions, Cooler Weather Weigh on Demand

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US natural gas futures fell on Tuesday as easing tensions between the US and Iran reduced geopolitical supply concerns, while cooler weather forecasts pointed to softer near-term demand.

The front-month Henry Hub contract and the continuous contract both declined by 3.17% to $3.15 per million British thermal units.

Market sentiment weakened after the US eased sanctions on Iran and President Donald Trump said the Strait of Hormuz would remain open, reducing concerns about disruptions to global energy supplies.

July Nymex natural gas futures were down 2.2% in morning trading as traders reacted to the cooler outlook. Lower air-conditioning demand is expected to weigh on power-sector gas consumption, while softer LNG export flows are leaving more supply available in the domestic market, according to BNEF data.

Lower-48 dry gas production was estimated at 111.5 billion cubic feet per day on Tuesday, up 3% from a year earlier. Meanwhile, total Lower-48 gas demand was projected at 72.8 Bcf/d, down 10.1% over the year, according to BNEF data.

NRG Energy said natural gas production has eased into the mid-to-upper 107 Bcf/d range, while demand has climbed into the low 100 Bcf/d range as temperatures warm, gradually tightening supply-demand balances.

Additional pressure came from updated weather models. Aegis Hedging said its latest forecasts showed a slightly cooler outlook for the Lower 48 over the next two weeks, driven primarily by a cooler Northeast despite warmer conditions in the Midwest.

Aegis also noted that LNG feedgas demand has recovered in recent weeks, although maintenance is planned on pipelines serving Sabine Pass, Corpus Christi and Golden Pass LNG facilities during several periods in late June and July, which could temporarily limit demand.

EBW Analytics said in a Monday note that LNG demand has rebounded from spring seasonal lows faster than production, while hotter weather expected in early July could further support natural gas prices by boosting cooling demand.

However, the firm said rising production and a 151 Bcf storage surplus compared with the five-year average could weigh on prices later this summer.

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