Will Hotter Temperatures Offset Ample Inventory and Rising Production?
Near-term weather models remain the dominant bullish catalyst. Vaisala projected above-normal heat across much of the U.S. for July 22–26, particularly in the Midwest where highs are expected to reach the mid-90s. Atmospheric G2 added that hotter trends could persist into early August in the South-Central and Southwestern U.S. This has potential to drive cooling demand higher, increasing gas-fired power burn.
Still, traders are weighing strong production and inventory levels against the bullish weather. Lower-48 dry gas output stood at 108.3 Bcf/d on Friday, up 5.3% year-over-year, according to BNEF. Simultaneously, demand was nearly flat at 78 Bcf/d (-0.3% y/y). That imbalance is reinforced by a weekly inventory build of +46 Bcf, slightly above both expectations and the five-year norm. Total storage is now 6.2% above the seasonal average, despite being 4.9% below year-ago levels.
Is Rising Electricity Demand Enough to Sustain Price Strength?
Support for gas prices also came from stronger electricity generation data. The Edison Electric Institute reported a 1.1% year-on-year increase in U.S. power output for the week ended July 12. For the 52-week period, generation rose 2.4% y/y, reflecting heightened cooling demand which could aid natural gas offtake from utilities.
However, rising production expectations could temper any weather-related rallies. Baker Hughes reported the active U.S. gas rig count rose by 9 to 117, the highest since early 2023. This marks a firm recovery from the four-year low of 94 rigs seen last September, signaling that producers are positioning for stronger volumes heading into late summer.
Can Bulls Push Through Technical Resistance?