FINWIRES · TerminalLIVE
FINWIRES

US Natural Gas Update: Larger Inventory Counters Heatwave to Edge Prices Down

By

Natural gas futures regained some losses in after-hours trading on Thursday but ended down on the day after US government data showed a larger-than-expected increase in storage inventories, outweighing support from strong cooling demand during a widespread heatwave ahead of the long Independence Day holiday weekend.

Both the front-month Henry Hub contract and the continuous contract edged down by 0.47% to $3.205 per million British thermal units.

The August contract fell to an intraday low of $3.151/MMBtu ahead of the US Energy Information Administration's weekly storage report as traders anticipated a sizeable inventory build. Although prices recovered after the release, they remained below the previous session's close.

The EIA reported that US natural gas inventories rose by 87 billion cubic feet in the week ended June 27, exceeding analysts' expectations for an 84-Bcf injection and well above the five-year average build of 64 Bcf for the period.

Total gas inventories were 1.0% below year-earlier levels but stood 6.4% above the five-year seasonal average, indicating comfortable supply levels despite robust summer demand.

Market sentiment was also pressured by updated weather forecasts pointing to cooler conditions beyond the current heatwave. According to Commodity Weather Group, forecasts shifted toward cooler conditions, with seasonally normal temperatures expected across the eastern two-thirds of the US between July 7-16.

Near-term weather, however, remained supportive. A heatwave covering much of the eastern two-thirds of the country continued to boost electricity demand for air conditioning.

Lower-48 natural gas demand was estimated at 79.1 Bcf/d on Wednesday, down 1.1 Bcf/d from the previous day but 4.7% higher than a year earlier, Barchart said citing BNEF data. The daily decline came despite a 4.1-Bfc/d increase in gas-fired power burn, to 42.3 Bcf/d, according to Celsius Energy.

Preliminary estimates from Energy Buyers Guide indicated that natural gas consumption by power generators exceeded 50 Bcf/d on Thursday, a level typically seen only during the hottest days of the summer. While temperatures are expected to peak on Friday, demand could be tempered by reduced industrial and commercial activity during the Independence Day holiday.

"Looking further ahead, the market may remain rangebound through the next several weeks unless heat persists long enough to materially shrink injection sizes, with rallies still likely to face resistance while inventories remain above normal and traders wait for a clearer shift in the late summer balance," Gelber & Associates said in a market note.

On the supply side, estimated net flows to US LNG export terminals rose to 19.3 Bcf/d on Thursday, up 0.1 Bcf from Wednesday and 1.5% higher than a week earlier.

Meanwhile, Lower-48 dry gas production was estimated at a very healthy 111.7 Bcf/d, up 1.1 Bcf on the day and 2.8% above year-ago levels.

Related Articles

Commodities

NRC Proposes Broad Overhaul of Nuclear Power Plant Licensing Rules

The US Nuclear Regulatory Commission on Wednesday proposed sweeping reforms in what it described as its most comprehensive update to nuclear power plant licensing in decades.The proposal would update licensing, safety oversight and siting requirements across every stage of a nuclear plant's lifecycle, from design and construction through operation, license renewal and decommissioning.The NRC said the proposal draws on decades of operating experience, lessons from new reactor licensing and the emergence of advanced reactor technologies. It also advances reforms required under the ADVANCE Act of 2024 and Executive Order 14300."This proposed rule strips out rigid frameworks and unnecessary conservatism to accelerate the safe deployment of new reactors and expand existing capacity across America," NRC Chairman Ho Nieh said.The proposal would streamline reactor construction by concentrating regulatory oversight on the most safety-significant systems and permitting certain early site activities under a general license after an application is docketed.Applicants and licensees would gain greater flexibility to use risk-informed methods instead of traditional approaches for safety reviews and model updates. The proposal also expands performance-based emergency planning to all reactor types.The proposal would let operators adopt an internationally recognized quality assurance standard. It also extends license renewal periods, broadens siting rules and introduces more flexible decommissioning funding requirements for advanced reactors.The NRC also proposed updating safety rules to support higher-enriched and accident-tolerant fuels by focusing on credible, risk-significant scenarios.Separately, in a related proposal also released Wednesday, the NRC unveiled revisions to its radiation protection regulations.While the proposed changes retain existing public and worker dose limits, they would replace the long-standing "as low as reasonably achievable" or the ALARA principle with a framework centered on compliance with established regulatory precautions and existing dose limits.According to the NRC, the current dose limits are already set well below levels associated with known health effects, and maintaining ALARA as a separate regulatory expectation has added costs and complexity without delivering measurable safety benefits."We're raising the standard for regulatory clarity, not lowering the standard for safety," Nieh said, adding that the proposal would not alter existing public or occupational radiation exposure limits.The regulator said the proposal is part of its broader effort to modernize its regulatory framework, reduce unnecessary compliance burdens, and ensure its rules reflect current science while maintaining public health and safety protections.The NRC will accept public comments for 45 days after the proposal is published in the Federal Register and plans to hold a public meeting during the comment period.

Commodities

China's 2026 LNG Demand Outlook Weakens as Industrial Consumption Slows, Kpler Says

Kpler lowered its 2026 China LNG demand forecast to 63.5 million metric tons as it expects weaker industrial activity to weigh on consumption later this year, the firm said in a Wednesday note.Kpler expects industrial activity to remain broadly stable through July and August before slowing in Q4, as weaker petrochemical, property and glass sectors reduce industrial gas consumption.Analysts expect Asian spot LNG prices to remain rangebound through Q3 as restocking demand supports the market. The firm expects prices to turn more bearish in Q4 as weaker industrial LNG consumption eases buying interest.China's apparent gas consumption fell 4% over the year to 34.98 billion cubic meters in April, according to the National Development and Reform Commission. Kpler estimates industrial gas demand declined by about 1.9 bcm over the year in May.Industrial gas demand came under pressure as supply concerns surrounding the Strait of Hormuz lifted Asian LNG prices, Kpler said. The firm expects the US-Iran peace deal to ease geopolitical risks and boost Middle Eastern methanol exports to China.Lower geopolitical risk following the US-Iran peace deal should increase Middle Eastern methanol shipments into China, loosening the domestic methanol market and weighing on local methanol production, Kpler said.Methanol-to-olefin economics have recovered modestly since gross margins fell to -$108 per metric ton in early June. However, Kpler said weak downstream petrochemical demand is likely to cap further margin gains and limit additional gas consumption.China's property downturn and persistent overcapacity across the solar supply chain are expected to reduce glass production in Q4, adding further pressure to industrial gas demand, according to the note.China's transport-sector LNG demand has also begun to soften. LNG truck sales reached 13,900 units in May, holding broadly steady over the year while remaining above the five-year average.Despite LNG's fuel-cost advantage over diesel, Kpler expects improving economics for electric heavy trucks to slow LNG truck adoption. Lower fleet utilization and weaker freight activity are also expected to weigh on demand through the fourth quarter.Reflecting those headwinds, Kpler reduced its 2026 China LNG demand forecast by 200,000 mt to 63.5 million mt, citing weaker industrial gas consumption later in the year.

Commodities

US Natural Gas Update: Futures Fall on Expectations of Larger Storage Build

US natural gas futures extended losses in after-hours trading on Wednesday as expectations for a larger-than-average increase in domestic gas inventories outweighed support from an intense heatwave expected to drive cooling demand across much of the country.The front-month Henry Hub contract and the continuous contract fell 1.95% to $3.211 per million British thermal units.Market participants await Thursday's weekly US Energy Information Administration storage report. According to Barchart, analysts expect natural gas inventories to rise by about 83 billion cubic feet for the week ended June 26, well above the five-year average injection of 64 Bcf for the corresponding week.Gelber & Associates projected an 81 Bcf storage injection. "For now, the market is not ignoring the heat, but it is also not treating it as a reason for a clean breakout while storage remains healthy and the forecast moderates beyond the front-end heat pulse," Gelber & Associates said in a Wednesday market note. "Furthermore, most forecasting models have maintained warmer-than-normal summer temperatures for the past few months, so it is likely priced in at face value."Near-term weather conditions, however, remain supportive of demand. Forecasts for July 1-5 continue to call for triple-digit daily highs across major population centers in the Midwest and Eastern US, lifting electricity demand and projected natural gas consumption.However, prices also came under pressure as weather forecasts for mid-July turned slightly cooler, potentially easing demand for air conditioning among power generators. Barchart reported that the Commodity Weather Group expects near-normal seasonal temperatures across the eastern US during July 6-15.Barchart, citing BNEF data, said Lower 48 US gas demand reached 80.2 Bcf per day on Wednesday, up 0.8 Bcf from the previous day and 4.0% higher than a year earlier. Celsius Energy estimated power-sector gas consumption at 39.2 Bcf on June 29, an increase of 3.9 Bcf from the previous day, although still 3.4 Bcf below the same day last year.On the supply side, US dry gas production averaged 110.5 Bcf/d on Wednesday, down 1.6 Bcf from the previous day but still 1.7% above year-earlier levels, reflecting continued robust output.Meanwhile, estimated net feedgas flows to US LNG export terminals slipped by 0.5 Bcf/d to 19.2 Bcf/d on Wednesday, remaining at historically strong levels and up 0.7% from a week earlier.