However, gains were initially limited Friday as traders weighed stronger U.S. supply metrics. Lower-48 dry gas output was pegged at 107.2 bcf/day, up +3.1% year-over-year, according to BNEF. Meanwhile, demand for the same day stood at 80.9 bcf/day, up just +0.9% y/y, signaling a widening supply-demand gap. Additionally, LNG net flows to U.S. export terminals dropped -5.4% week-over-week to 14.7 bcf/day, raising questions about near-term export-driven support.
EIA Storage Data Surprises to the Bullish Side
Thursday’s EIA storage report helped spark the late-week recovery in prices. Inventories for the week ended July 18 rose by just +23 bcf, underperforming both consensus estimates (+27 bcf) and the five-year average (+30 bcf). While storage levels remain +5.9% above their seasonal average, they are still -4.8% lower than a year ago, suggesting some tightening.
Europe’s storage levels, by contrast, remain weak. Inventories as of July 22 were just 66% full versus the five-year average of 74% for this time of year. That discrepancy may help U.S. exports regain momentum later, but the near-term picture is dominated by domestic conditions.
Are Rising Rig Counts Signaling More Supply Pressure Ahead?
Baker Hughes reported Friday that the number of active U.S. natural gas rigs climbed by +5 to 122—the highest level in nearly two years. That marks a notable increase from the 4-year low of 94 rigs seen in September 2024. A sustained rise in drilling activity suggests producers are anticipating stronger margins or are hedging against expected demand, but it also adds bearish pressure over the medium term if output accelerates further.
Market Forecast: Cautiously Bullish Near-Term