US natgas holds near 3-month low on record output, lower LNG flows

NEW YORK: US natural gas futures held near a three-month low on Wednesday on record output, lower flows to liquefied natural gas export plants and ample amounts of gas in storage.

On its last day as the front-month, gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 0.9 cent, or 0.3percent, to USD2.653 per million British thermal units (mmBtu), putting the contract on track for its lowest close since April 29 for a second day in a row.

That move also put the front-month down for a fifth day in a row for the first time since mid-April and kept it in technically oversold territory for a third day in a row for the first time since mid-July.

Futures for September, which will soon be the front-month contract, held around USD2.72 per mmBtu, putting the premium of the September over August at a record high for a fifth day in a row. In a sign that the market is not too worried about gas supplies over the next year, the average of futures over the next 12 months fell to USD3.12 per mmBtu, its lowest since November 2024.

Financial firm LSEG said average gas output in the US Lower 48 states has risen to 110.6 billion cubic feet per day (bcfd) so far in July, up from 110.0 bcfd in June, putting production in line to match the monthly record high of 110.6 bcfd in December 2025.

Analysts said gas inventories have remained higher than the five-year (2021-2025) average since the spring when the weather was mild, allowing energy firms to stockpile more gas than usual. Now, as they wait for a federal report on Thursday, analysts projected the amount of gas in storage likely rose to 6.6percent above normal during the week ended July 24, up from 6.4percent above normal during the previous week. That inventory surplus has continued due in part to near-record output despite weeks of above-normal temperatures so far this summer.

Meteorologists forecast the weather would remain mostly warmer than normal through August 13, forcing power generators to continue burning lots of gas to keep air conditioners humming. About 40percent of US power generation comes from gas-fired plants. LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 110.6 bcfd this week to 112.7 bcfd next week. Those forecasts were similar to LSEG’s outlook on Tuesday. Average gas flows to the nine big US LNG export plants have eased to 17.2 bcfd so far in July due in part to maintenance at Freeport LNG’s 2.4-bcfd plant in Texas, down from 17.4 bcfd in June and a monthly record high of 18.8 bcfd in April.

In other LNG news, California energy firm Sempra Energy said its Sempra Infrastructure unit shut the 0.4-bcfd Energia Costa Azul export plant in Mexico due to damage to the project’s refrigerant compressors after the facility shipped its first cargo earlier in July.

Costa Azul, which consumes US gas from the Permian basin in Texas and New Mexico, is on track to return in the fourth quarter of 2026.