U.S. natural gas prices have moved lower after a recent rally. The main driver is updated weather forecasts pointing to more moderate temperatures in the second half of June, reducing expectations for electricity demand for cooling.
Additional pressure comes from higher production volumes and ongoing LNG export constraints related to maintenance at several export facilities. Against this backdrop, July Henry Hub futures have pulled back to around $3.1/MMBtu, while market participants are taking profits after the spring rally.
High inventories remain the key bearish factor
The fundamental picture still appears relatively comfortable for gas consumers. Storage levels are above seasonal averages, and injection rates remain solid. According to EIA estimates, inventories could end the injection season at about 7% above the five-year average. This supply surplus and market confidence in adequate storage replenishment are limiting upside potential in the short term.
LNG and summer heat remain key drivers for the second half of the year
Despite the current correction, the medium-term outlook appears more balanced. The commissioning of new U.S. LNG export capacity and the gradual recovery in terminal utilization continue to support long-term demand. Analysts note that sustained export growth and increased power sector consumption could accelerate the drawdown of excess inventories in the second half of the year. In the case of prolonged summer heat, the market could quickly return to an upward trend.
Near-term outlook
At present, the balance of factors remains tilted to the downside. The combination of high inventories, rising supply, and temporarily weak LNG demand creates conditions for further consolidation or moderate price declines. However, the market remains highly sensitive to weather changes and LNG export dynamics, so any signs of intensifying heat or recovering export demand could quickly shift sentiment.
Currently, NATGAS prices are pulling back from support near the $3.00 level toward resistance at $3.05. Selling from this level could lead to a break below support and a move toward $2.85–2.80, as previously noted in Natural gas holds below $3.24 as weak demand pressures prices. A break above resistance would open the way for a move toward $3.10–3.15.
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