Production reinforces the overhang. Lower-48 dry gas output was estimated at 112.6 Bcf per day, up 3.6% from a year ago. The EIA also raised its 2026 production forecast to 111.2 Bcf per day from 111.0. Baker Hughes reported the rig count unchanged at 126, below February’s 2.5-year high of 134, but output at current levels shows the existing wells are producing more than enough to keep the market comfortable.
Cooler forecasts across the Southwest and Mid-Atlantic through July 26 took some weather premium out right when summer gas burn should be running at its strongest. Lower-48 demand was estimated at 80.5 Bcf per day, up only 1.2% from last year. Edison Electric Institute data showed power generation rose 7.73% year-over-year in the latest reporting week, but stronger electricity demand has not been enough to tighten supplies with production running this high.
What to Watch
The U.S.-Iran conflict and the global LNG supply squeeze are the only support this market has. Ras Laffan operating at reduced capacity for years and European buyers scrambling for replacement cargoes give U.S. producers a longer export runway. But a comfortable storage surplus and production still climbing means the export bid has to hold or prices have nothing underneath them.
The technical picture shows a market trying to build a base after a steep selloff, but without a volume shift to confirm the turn. Reclaiming the former bottom near $2.974 is the first signal that short-covering has legs. Below that, the longer bulls wait for a catalyst, the closer the market drifts toward levels where the summer rally trade gets abandoned entirely.
More Information in our Economic Calendar.