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US Natural Gas Update: Prices Tread Water on Weak Demand Outlook, Record Output

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US natural gas futures prices edged down in midday trade as forecasts for weaker short-term cooling demand weighed on market sentiment while supplies remain abundant.

The front-month Henry Hub contract and the continuous contract both fell by 0.19% to $2.687 per million British thermal units.

Meteorologists are expecting moderating temperatures across much of the country in the coming weeks, reducing the likelihood of a sharp increase in gas consumption during the summer cooling season.

The softer short-term demand outlook has added pressure to prices already constrained by strong production and elevated inventory levels, Trading Economics said in a Tuesday update.

NRG Energy said longer-term demand trends remain robust, with total natural gas demand averaging 4.8 billion cubic feet per day above August 2025 levels month-to-date, though year-to-date demand is 0.8 Bcf/d below 2025 levels.

LNG export feedgas demand has increased 0.7 Bcf/d from August 2025 levels so far this month and is up 2.6 Bcf/d year-to-date, according to NRG. Power sector demand is also higher, with power burn running 4.5 Bcf/d above August 2025 levels.

However, natural gas storage volumes have remained above the five-year average since March, supported by robust output and mild spring weather that limited heating demand.

Inventories were about 6% above normal for the week ended July 24, reinforcing concerns over ample supply heading into the remainder of the injection season. The next weekly inventory report from the US Energy Information Administration is due out on Thursday.

NRG said it expects a 27 Bcf injection for the week ended July 31, which would leave inventories 189 Bcf above the 5-year average and 18 Bcf below year-ago levels.

Regarding output, US Lower 48 natural gas production averaged a record 110.7 Bcf/d in July, according to a Trading Economics update on Tuesday. At the same time, flows to major liquefied natural gas export facilities declined due to maintenance-related disruptions, reducing a key source of domestic gas demand.

Energy markets also faced additional downward pressure from easing geopolitical concerns. Improving prospects for a potential US-Iran agreement and the possibility of a reopening of the Strait of Hormuz reduced supply-risk premiums and weighed on broader energy prices.

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