- The near-month natural gas futures contract on the New York Mercantile Exchange plummeted to a two-week low, primarily due to last week's official inventory report showing a larger-than-expected increase and the short-term rise in maintenance at liquefied natural gas export terminals. Market selling pressure quickly gathered after the data release, leading to a lower settlement price for the near-month contract, highlighting the current short-term supply-demand rebalancing pressure in the North American energy market.
- The latest weekly data from the U.S. Energy Information Administration showed that for the week ending June 5, the underground storage injection reached 108 billion cubic feet, significantly higher than the previously expected 99 billion cubic feet and surpassing the historical average level for the same period over the past five years. The high inventory base directly suppresses spot prices.
- Although the current nationwide high temperature forecast may drive up gas demand on the power generation side, the routine spring maintenance at liquefied natural gas export terminals owned by major energy companies like ExxonMobil has led to a continuous decline in the flow of feed gas to the nine core export plants, temporarily offsetting potential seasonal benefits.
Larger-than-expected inventory injection exacerbates supply-side reservoir pressure
The data disclosed by the U.S. Energy Information Administration (EIA) was the direct trigger for the recent price correction. For the week ending June 5, U.S. energy companies injected 108 billion cubic feet of natural gas into storage facilities. This figure is nearly 10 billion cubic feet higher than the 99 billion cubic feet expected by industry analysts surveyed by Reuters. From a historical perspective, although this number is slightly lower than last year's increase of 110 billion cubic feet for the same period, it is significantly higher than the five-year average increase of 95 billion cubic feet for this period. This indicates that the overall inventory level in the U.S. natural gas market is relatively abundant, and the high-density inventory injection suggests that during the previous price rise, downstream actual consumption speed did not fully match the storage speed on the supply side.
Production marginally declines from high levels but remains resilient overall
In terms of supply structure, the latest data from the London Stock Exchange Group (LSEG) shows that since June, the average daily natural gas production in the contiguous United States has fallen to 1,090 billion cubic feet. This level represents a marginal decline compared to May's 1,097 billion cubic feet and is also below the monthly historical high of 1,106 billion cubic feet set in December 2025. Nevertheless, the average daily production level since June has shown a slight rebound in recent days, and the high-level consolidation of the supply side's total volume has largely weakened the narrative support for long-term supply shortages. If future daily production does not record further structural reductions, the short-term price center may still face implicit pressure from supply surpluses.
Spring maintenance at export terminals temporarily suppresses feed gas demand
The marginal weakening on the international demand side is another main reason for the pressure on near-month prices. Recently, several large export terminals, including ExxonMobil's Qatar Energy Golden Pass facility and the Freeport LNG plant in Texas, have undergone intensive routine spring maintenance. As a result, the average flow of natural gas to the nine large U.S. liquefied natural gas export plants has decreased from 171 billion cubic feet per day in May to the current 165 billion cubic feet per day since June. This is a significant decline compared to the historical high of 188 billion cubic feet per day set in April. The temporary obstruction of export channels has forced the feed gas originally intended for international circulation to remain in the domestic supply chain, exacerbating the difficulty of digestion in the local spot market.
Seasonal high temperature expectations may trigger potential reevaluation of power load
However, from a forward-looking perspective, the latest weather model forecasts show that by June 26, temperatures across most of the United States will generally be higher than the average level for the same period in previous years. According to statistics, about 40% of U.S. electricity comes from gas-fired power plants, and sustained hot weather typically prompts utility companies to increase natural gas consumption to cope with the surge in air conditioning cooling loads. The London Stock Exchange Group predicts that the overall average natural gas demand in the contiguous United States, including exports, is expected to rise from 102.9 billion cubic feet per day this week to 104.3 billion cubic feet per day next week. If the temperature rebound exceeds expectations in magnitude and duration, the tight balance in the spot market may be re-triggered in the second half of the month.
Energy supply chain upstream and downstream companies collectively face valuation pressure
Under the transmission effect of falling natural gas prices, related entities in the capital market have also experienced valuation corrections. Cheniere Energy's Corpus Christi export plant in Texas, after a brief suspension of production lines during the medium-scale third-phase expansion project, is expected to gradually resume receiving natural gas. However, due to the downward shift in the central commodity price, the overall energy sector sentiment is suppressed. European market-linked products such as Dutch TTF natural gas futures also show weakness. If the destocking speed on the supply side cannot keep up with the recovery in production in the coming weeks, the profit margins and cash flow expectations of listed companies in the upstream and downstream industry chains may face the risk of a phased correction.
