US natural gas futures saw a decline as weather forecasts indicated cooler temperatures in the coming weeks, suggesting a decrease in demand for gas-fired electricity as consumers reduce air conditioner usage. This downturn was exacerbated by the entry into service of Kinder Morgan’s Gulf Coast Express pipeline expansion project, which is set to transport more gas from the oversupplied Permian Basin to surrounding areas, thereby reducing flaring.
Additionally, US gas flows to liquefied natural gas (LNG) export facilities experienced a tick down, contributing to an increased supply within the domestic market. This combination of reduced demand and augmented supply pushed futures prices lower.
Conversely, other reports indicated that earlier in the week, natural gas prices had rallied due to forecasts of hotter US weather potentially boosting demand for air conditioning. For instance, July Nymex natural gas closed up +$0.122 (+3.79%) on Thursday, reaching a 2.5-week high on expectations of above-average temperatures in the Midwest and Northeast from June 30 to July 4. However, this earlier rally was tempered by a larger-than-expected rise in weekly US gas storage levels, which increased by +76 Bcf, surpassing expectations of +69 Bcf.
Despite the recent drop, the overall market remains influenced by fluctuating demand forecasts and supply dynamics, including the impact of new infrastructure and international LNG flows. The broader context includes projections for higher US natural gas production, with the EIA raising its forecast for 2026 US dry natural gas production to 111.0 Bcf/day from a May estimate of 110.6 Bcf/day, which acts as a negative factor for prices.
