The week began with updated GFS and EC models trimming five cooling degree days from their outlooks, shifting sentiment quickly. While much of the southern U.S. remained hot, cooler conditions in the Midwest and Northeast curbed national demand expectations.
Vaisala projected widespread mild weather from July 31 through early August, further reducing anticipated power burn just as the market entered a seasonally critical stretch.
Is Surging Supply Overwhelming the Market?
Production remains a core bearish factor. Lower-48 dry gas output averaged over 107 Bcf/day last week, up nearly 3% year-over-year. Baker Hughes reported nine new active rigs, pushing the gas count to 117—a 17-month high—by Friday. On the final trading day of the week, that number climbed further to 122, the highest since 2023. Rising rig counts suggest producers are hedging forward or anticipating firmer margins, but in the near term, the added output weighs heavily on prices.
Are Storage Trends Losing Influence?
Thursday’s EIA report injected a mild bullish tone with a 23 Bcf build—below both the 27 Bcf consensus and the five-year average of 30 Bcf. The miss triggered short-covering, but failed to reverse the broader trend.
Inventories remain 5.9% above the five-year norm and just 4.8% below year-ago levels, indicating a well-supplied market despite the slower injection.
Are LNG Exports Supporting or Sagging?
LNG feedgas flows ended the week at 14.7 Bcf/day, down 5.4% from the prior week. International demand remains tepid, with European storage 66% full compared to a five-year average of 74%.