- On Thursday, the near-month natural gas futures contract (NG1!) for July delivery on the New York Mercantile Exchange (NYMEX) fell by 2.7%, closing at $3.099 per million British thermal units, reaching a two-week closing low since May 27.
- The weekly report released by the U.S. Energy Information Administration (EIA) showed that for the week ending June 5, U.S. energy companies injected 108 billion cubic feet of natural gas into storage facilities, significantly higher than the 99 billion cubic feet widely expected by analysts in a Reuters survey.
- Due to routine spring maintenance at liquefied natural gas (LNG) export plants of major energy companies like ExxonMobil (XOM:US), the flow rate of feed gas to large U.S. export terminals has dropped to 16.5 billion cubic feet per day since June, causing a temporary decline on the demand side.
Inventory Increase Exceeds Expectations, Pressuring Short-Term Spot Market Sentiment
According to the latest data disclosed by the U.S. Energy Information Administration (EIA), the inventory increase for the week ending June 5 reached 108 billion cubic feet. This figure not only significantly exceeds the previous market forecast of 99 billion cubic feet but also surpasses the five-year average of 95 billion cubic feet for the same period. Although the net injection for the week was slightly lower than last year's 110 billion cubic feet, the relatively abundant supply and demand situation continues to exert direct pressure on short-term prices. Analysts point out that if inventory levels remain above the five-year moving average, the forward valuation of natural gas may face further reassessment.
Slight Fluctuations in Production Intertwined with Export Plant Maintenance
On the supply side, data from the London Stock Exchange Group (LSEG) indicates that since June, the average daily natural gas production in the contiguous 48 states of the U.S. has dropped to 109 billion cubic feet, lower than May's 109.7 billion cubic feet and also below the historical high of 110.6 billion cubic feet set in December 2025. Meanwhile, due to seasonal maintenance at ExxonMobil (XOM:US), Qatar Energy's Golden Pass facility, and Texas's Freeport LNG plant, the average flow to the nine major LNG export plants has decreased from May's 17.1 billion cubic feet per day to the current 16.5 billion cubic feet per day, a noticeable decline from April's historical high of 18.8 billion cubic feet per day.
Fluctuations in Industrial Export Demand and Pipeline Recovery Progress
Cheniere Energy's (LNG:US) Corpus Christi export plant in Texas is gradually resuming normal operations after experiencing a brief technical fault. Previously, the plant's intake of feed gas was temporarily disrupted due to the shutdown of production lines one to six in the third phase expansion project on Wednesday. The facility is expected to receive more natural gas again on Thursday. This fluctuation at a single export terminal has amplified the supply return effect on the domestic spot market during the overall maintenance season.
Extreme Heat Expectations May Support Subsequent Power Plant Demand
Looking ahead, weather forecasts indicate that temperatures across most of the U.S. will be generally higher than the same period in previous years until June 26. Since about 40% of the U.S. power supply relies on gas-fired power plants, hot weather typically stimulates electricity demand for residential and commercial air conditioning, thereby driving a rebound in natural gas consumption. The London Stock Exchange Group (LSEG) predicts that the total natural gas demand in the contiguous 48 states of the U.S., including exports, is expected to rise from this week's 102.9 billion cubic feet per day to 104.3 billion cubic feet per day next week. If future heat levels exceed expectations, strong buying from the power sector may partially alleviate the current inventory pressure.
