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Energy · Futures · Natural Gas · Weather
Natural gas futures (July Nymex) surged 2.92% to a one-week high on Tuesday, driven by forecasts for hotter U.S. weather boosting electricity demand and a significant 11.4% week-over-week jump in LNG exports to a seven-week high of 19.6 bcf/day.
The Commodity Weather Group confirmed warmer temperatures across the western U.S. through June 30, increasing demand for air conditioning. U.S. natural gas exports saw a strong rebound as seasonal maintenance on export terminals concluded, signaling robust foreign demand that will reduce domestic supplies.
An excessively short position by hedge funds, which boosted their net-short natural gas futures positions to a two-year high of 34,059 by June 9, sets the stage for potential short-covering rallies. Medium-term support for prices comes from the outlook for tighter global LNG supplies, specifically due to extensive damage reported by Qatar at the Ras Laffan plant, which accounts for 20% of global LNG supply, and the closure of the Strait of Hormuz.
However, the EIA raised its 2026 U.S. dry natural gas production forecast to 111.0 bcf/day, a negative factor for prices. Despite a bearish EIA report showing a higher-than-expected inventory build of 108 bcf for the week ended June 5, active U.S. nat-gas drilling rigs fell to an 8-month low of 121 rigs by June 12, according to Baker Hughes.