Is Weather Still Supporting the Bullish Narrative?
Weather forecasts remain a mixed bag. While the South and East are projected to stay hot through July 1 with potential record highs, broader trends point to moderating conditions. The Commodity Weather Group sees cooler temperatures across the eastern U.S. through early July, weighing on gas demand for air conditioning. Meanwhile, recent strong wind generation has offset some gas burn, though a decline in wind output may offer short-term support.
Will Storage Surplus Cap Any Summer Rally?
The market is bracing for another above-average storage injection. Analysts expect an 88 Bcf build for the week ending June 20, surpassing the five-year norm of 79 Bcf. Last week’s 95 Bcf build underscored surplus concerns, with inventories now 6.1% above seasonal averages. Persistent above-average injections could limit price recoveries even as summer heat intensifies in parts of the U.S.
Is Geopolitical Risk Still a Factor for LNG?
Risk premiums tied to global LNG flows have eased following the Israel-Iran ceasefire. While U.S. LNG exports remain firm at 14.7 Bcf/day (+9.2% week-over-week), dry gas output is robust at 105.9 Bcf/day (+2.9% y/y). Domestic demand is lagging at 79.9 Bcf/day, while power generation has dropped 3.1% y/y, reinforcing the bearish supply-demand setup.
Short-Term Market Forecast: Bearish Below $3.78
With prices entrenched below both the 50- and 200-day moving averages, and fundamentals skewed negative on weather and storage, the near-term outlook remains bearish. Resistance is seen at $3.78–$3.90, while a sustained break under $3.544 likely opens the door to a test of $2.885. Only a surprise storage draw or a sharp heat wave would alter this bearish narrative.
More Information in our Economic Calendar.