US natgas prices fall to three-month low

US natural gas futures fell to $3.07/MMBtu on Tuesday, marking the lowest level since April 22, as weaker-than-expected summer heat and robust production continued to weigh on prices throughout July.

Weather forecasts have consistently pointed to milder-than-normal temperatures across key consumption areas in North America, reducing the demand for air conditioning and consequently limiting gas consumption for power generation. This softer cooling demand has dampened seasonal price support, especially during a period when natural gas usage typically peaks.

At the same time, production remained resilient, with output in the Lower 48 states averaging a record 107.2 billion cubic feet per day (bcfd) so far in July, surpassing June’s previous record of 106.4 bcfd. This steady high supply has reinforced concerns about market oversupply, making it difficult for prices to gain upward momentum.

Inventories have also contributed to the bearish sentiment, standing approximately 6% above the five-year seasonal average. This elevated inventory level further signals abundant supply and less urgency among market participants to draw down stocks.

On the export front, US liquefied natural gas (LNG) exports have also ramped up, with gas flows to the country’s eight major LNG export facilities reaching 15.8 bcfd in July. This increase was driven by the return to service of several terminals following maintenance and unplanned outages, supporting export volumes despite weaker domestic demand. However, while LNG exports help to absorb some of the excess supply, the ongoing maintenance cycles and increased global competition continue to limit upside pressure on prices.

Looking ahead, market participants will be closely watching upcoming weather patterns and production trends, as well as potential changes in LNG demand driven by global economic conditions and geopolitical factors. Any unexpected heatwaves or disruptions to supply could tighten the market, but for now, the outlook remains bearish amid balanced-to-surplus supply conditions and subdued cooling demand.