Weather updates offered short-term support to natural gas prices on Friday. Atmospheric G2 noted a shift toward warmer temperatures across the western U.S. for August 20–24, even as cooler outlooks persisted in the East. This divergence helped prices rebound slightly after Wednesday’s nine-month low, though upside momentum remains capped by bearish supply expectations.
The EIA revised its 2025 U.S. natural gas production estimate higher by 0.5% to 106.44 bcf/day and raised its 2026 forecast by 0.7% to 106.09 bcf/day. With dry gas output on Friday hitting 109.9 bcf/day—up 7.3% year-over-year—and U.S. production near record levels, these numbers continue to pressure the market’s long-term supply-demand outlook.
Are LNG Exports and Demand Keeping Pace with Output?
Domestic demand remains modest in comparison. Lower-48 gas demand on Friday was 80.3 bcf/day, up just 1.2% year-over-year. LNG export flows offered more support, climbing 4.8% week-over-week to 15.7 bcf/day. While strong LNG exports help absorb some of the supply glut, they’re not offsetting the rapid pace of production growth.
Electricity generation data added to the bearish sentiment. The Edison Electric Institute reported a 1.9% year-over-year decline in U.S. power output for the week ended August 9, although output over the trailing 52-week period remained up 2.6%. Slowing power burn could cap upside for near-term gas demand, particularly if cooling needs taper off.
Is the Inventory Picture Still Supportive?
Thursday’s EIA storage report showed a +56 bcf injection for the week ending August 1, above both the +54 bcf consensus and the +33 bcf five-year average. Total inventories are 6.6% above the five-year average despite being 2.4% below year-ago levels. Meanwhile, European gas storage stood at 72% full—under the 5-year norm—raising questions about future global demand if refilling picks up.
Market Forecast: Bullish Above $2.956, But Downside Risk Remains