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US Natural Gas Update: Prices Drop Despite Eastern Heatwave Forecasts

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US natural gas futures extended earlier losses in midday trading on Monday, pulling back from last week's three-week high as abundant supply conditions defied expectations of exceptionally strong heat-driven demand.

The Henry Hub continuous and front-month contracts each fell 2.59% to $3.194 per million British thermal units.

The drop came even as weather-driven consumption signals remained elevated. NatGasWeather.com noted widespread extreme-heat forecasts across population centers in the eastern US, with high pressure dominating roughly two-thirds of the region and pushing temperatures toward or above 100 degrees Fahrenheit, supporting strong-to-very-strong cooling demand over the next week.

Celsius Energy's latest 14-day model points to 201 gas-weighted degree days for June 29-July 12, running 33 above the five-year average and marking the strongest reading for this period in five years, underscoring unusually intense heat-related demand conditions.

Supply fundamentals, however, remained firmly bearish. Dry gas output climbed to a very healthy 108.3 billion cubic feet per day over the weekend, according to NRG Energy, while broader Lower 48 production has averaged an even stronger 109.7 Bcf/d through June, according to Trading Economics.

Storage conditions also continue to weigh on sentiment. The US Energy Information Administration reported inventories at 152 Bcf above the five-year average, reinforcing a well-supplied market heading into peak summer demand.

Demand gains from power generation have been notable, but not enough to offset supply strength. NRG data show power burn has risen by 2.2 Bcf/d since Sunday as air-conditioning load increases across much of the country. Industrial demand has been largely stable.

LNG export flows edged higher over the weekend to 18.1 Bcf/d after a brief dip last week. However, operational uncertainty remains around key infrastructure. The Golden Pass LNG, a joint venture between QatarEnergy and ExxonMobil, has reportedly taken in minimal feedgas over the past three days and appears to be offline, according to LSEG data cited by Reuters. The plant has been commissioning its first train since late March, with intermittent start-stop activity as operators test and tune the equipment.

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