July Nymex natural gas (NYMEX: NGN26) closed up +0.122, a gain of 3.79%, on Thursday as heat forecasts across the United States pushed prices sharply higher.
Nat-gas futures rallied to their highest level in two and a half weeks, driven by expectations of surging electricity demand from air-conditioning units across major population centers.
The Commodity Weather Group said on Thursday that above-average temperatures are expected across the Midwest and Northeast from June 30 through July 4, adding significant bullish momentum to the market.
Higher temperatures typically force electricity providers to burn more natural gas to meet peak power demand, tightening near-term supply and lifting futures prices.
Prices briefly dipped during Thursday’s session after the EIA reported that nat-gas inventories rose by +76 bcf last week, coming in above market expectations of +69 bcf and above the five-year weekly average of +75 bcf.
As of June 19, nat-gas inventories were down 2.2% year-over-year but sat 5.7% above their five-year seasonal average, signaling that overall supply levels remain adequate despite the weekly build.
US lower-48 dry gas production on Thursday reached 112.0 bcf/day, up 3.4% year-over-year according to BNEF, while lower-48 state gas demand came in at 72.9 bcf/day, down 10.5% year-over-year.
Estimated LNG net flows to US export terminals on Thursday were 19.1 bcf/day, up 0.8% week-over-week according to BNEF, reflecting continued strong export activity from American shores.
Medium-term support for nat-gas prices stems from tighter global LNG supply conditions following serious infrastructure damage in Qatar earlier this year.
On March 19, Qatar reported “extensive damage” at the world’s largest natural gas export plant at Ras Laffan Industrial City, with Iran blamed for attacks that damaged 17% of the facility’s LNG export capacity.
Qatar said the damage at Ras Laffan, which accounts for roughly 20% of global liquefied natural gas supply, will take three to five years to fully repair, a significant long-term constraint on global supply.
The closure of the Strait of Hormuz due to the war in Iran has further curtailed natural gas supplies flowing to both Europe and Asia, adding another layer of structural tightness to global markets.
Gas storage in Europe stood at just 47% full as of June 23, compared to the five-year seasonal average of 62% full for this time of year, highlighting the severity of the supply squeeze facing the continent.
On the production side, the EIA raised its forecast for 2026 US dry nat-gas production to 111.0 bcf/day on June 9, up from its May estimate of 110.6 bcf/day, a bearish signal for domestic prices.
Baker Hughes reported that the number of active US nat-gas drilling rigs in the week ending June 19 rose by one to 122 rigs, though that figure remains well below the two-and-a-half-year high of 134 rigs recorded in February 2026.
The Edison Electric Institute reported Wednesday that US lower-48 electricity output in the week ended June 20 fell 2.17% year-over-year to 89,351 gigawatt hours, though output over the broader 52-week period ending June 10 rose 2.45% year-over-year to 4,347,841 gigawatt hours.
