The past week, the natural gas market has been shaped by a complex interplay of environmental and logistical factors. While the U.S. has seen a recent cooldown after a hot start to August, Southern Europe continued to swelter under prolonged heatwaves exceeding 40°C, exacerbating drought conditions and raising the risk of wildfires. Such extraordinary weather patterns were a key driver of surplus demand, even as rising gas storage levels in both regions exerted downward pressure on prices. However, the high volume of LNG exports created a counterbalancing force, drawing on available supplies and adding upward pressure to the market.
USA Storage Levels: Inventories Within 5Yr Historical Range
As of August 15, 2025, U.S. working natural gas in storage stood at 3,199 Bcf, reflecting a net weekly injection of 13 Bcf. Stocks are currently 95 Bcf lower than last year at this time but remain 174 Bcf above the five-year average, indicating a comfortable supply surplus heading into the autumn injection period.
Regionally, builds were concentrated in the East (+13 Bcf) and Midwest (+16 Bcf), while the South Central and Pacific saw small withdrawals due to strong cooling demand. Overall inventories are well within the five-year historical range, and the pace of injections, though modest compared to earlier weeks, keeps storage on track to reach high pre-winter levels. This storage buffer continues to act as a stabilizing factor for U.S. natural gas prices despite localized heat-driven demand in the southern states.
USA Weather Conditions: Cooldown Break Finally Arrived
In mid-August, the U.S. experienced a cooldown after a very hot start to the month. Average temperatures during this period were about 0.8°C below the historical norm. Daytime highs generally ranged between 24–30°C, while nights were cooler, around 15–22°C. Regional variations were notable: the West and parts of the North remained warmer than normal, while the Central and Eastern states saw a modest cooling trend. Localized showers and thunderstorms occurred, especially in the northern and southeastern states. At the same time, the Southwest and parts of the West endured anomalous heat, with daytime highs reaching 32–35°C in some areas.
Source: https://www.accuweather.com/en/weather-forecasts
The forecast suggests the continuation of moderately warm weather, with daytime temperatures around 24–28°C in most regions. The West and Central U.S. may see short-lived temperature increases, but prolonged or extreme heatwaves are not anticipated. Likewise, the Southwest will remain the main hotspot, where heat risks persist through the weekend. Rainfall will be concentrated in the South and East, with monsoon activity expected in the Southwest and Rocky Mountains.
Source: https://www.cpc.ncep.noaa.gov/
Intermittent rains are expected in the Northern and Eastern states. The Northeast is projected to cool further, with localized rainfall adding to the relief.
Source: https://www.cpc.ncep.noaa.gov/
As I already noted in the previous posts, Cooling Degree Days (CDD) is a weather-based indicator used to estimate the demand for energy needed to cool buildings. Between August 13–20, 2025, CDD across the major gas-consuming U.S. states showed clear regional contrasts. Florida (136 CDD) and Texas (130 CDD) recorded the highest cooling demand, reflecting persistent heat and humidity that kept air-conditioning usage near seasonal peaks. Louisiana (128 CDD) followed closely, also indicating strong power burn for cooling in the Gulf region. California (89 CDD) registered moderate values, with warm conditions returning after earlier mild spells, boosting electricity demand. In contrast, the Northeast (New York – 26 CDD) experienced a significant cooldown, sharply lowering air-conditioning needs compared to the prior hot weeks. Overall, this pattern meant robust natural gas demand for power generation in the South and West, while demand in the Northeast tapered off, easing some national consumption pressure.
Looking ahead to August 22–27, 2025, forecasts suggest continued high CDD levels in the Southern states (Texas, Florida, Louisiana), keeping cooling demand elevated and sustaining natural gas burn for electricity. California is expected to remain warm, supporting moderate CDD, while the Northeast will stay relatively mild with limited cooling requirements. For the gas market, this means regional weather-driven demand will remain concentrated in the southern tier of the U.S., where extreme heat persists, ensuring that natural gas consumption for power generation remains strong even as northern states reduce their reliance on cooling. This geographic imbalance will keep southern pipeline flows and LNG feedgas demand elevated, providing support to natural gas prices despite cooler conditions elsewhere.
After a brief dip in early August, CDD values recovered and held around 12–14 per day, reflecting continued hot conditions in the southern tier of the country. So, forecasts show a noticeable drop in CDD, with weighted values projected to fall below the long-term average. This transition signals a shift from strong weather-driven demand to more balanced conditions, tempering upward pressure on prices in the near term.
Europe Weather Conditions: The thermal dome may weaken, which will reduce the heat, but there will be no cold yet.
Across much of Europe, a persistent high-pressure system (subtropical ridge) has dominated, trapping hot and dry air masses. Meanwhile, low pressure systems and fronts lingered mainly over Northern Europe, bringing cooler and wetter conditions there. Since August 10, a strong heat dome has blanketed Western, Central, and Southern Europe, triggering a major heatwave. Temperatures across much of the continent have soared +8 to +15°C above normal, with widespread highs of 30–40°C and above.
Source: https://weather.metoffice.gov.uk/maps-and-charts/surface-pressure
Southern Europe, especially Spain, Italy, and the Balkans, has endured the most severe heat, with long-lasting episodes of 40°C+, aggravating drought and increasing wildfire risk. The heatwave has had significant environmental and energy implications, pushing up cooling demand, stressing water supplies, and worsening soil dryness.
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Europe/temperature.shtml
The heat will persist across Western and Central Europe, particularly in the south and southwest, where temperatures will hover around 30–38°C. The risk of drought intensification and wildfires will remain elevated. Toward the end of August, a possible weakening of the heat dome, leading to more variable and unsettled weather, though relief may come too late for regions already under prolonged stress.
U.S. Production and LNG Exports: Double Impact Comes in Play
Liquefied natural gas (LNG) exports are playing an increasingly important role in gas price formation. The United States is exporting gas at record rates, while Europe increasingly relies on LNG imports for supply, and Asia’s appetite for LNG continues to grow. High LNG export volumes produce a double impact: they tighten domestic supply in exporting countries (supporting prices there) and link regional markets into a global pricing web (as importers compete for cargoes).
The U.S. is currently shipping LNG overseas at near full capacity, which is a significant draw on its gas supply. In the past week, feedgas deliveries to LNG export terminals hit new highs – for example, with the Freeport LNG facility (recently restarted) and the brand-new Plaquemines LNG plant together pulling over 3 Bcf/day of gas. Total LNG feedgas demand has been in the ~11–12 Bcf/day range lately, meaning roughly 10–15% of U.S. daily natural gas production is now destined for export. This heavy outflow contributed to the very small storage build noted last week (as gas that could have gone into storage was liquefied and exported instead). For the domestic market, such high LNG exports act like an extra demand source, effectively tightening the balance and supporting prices. Even with U.S. production at or near record levels, the fact that so much gas is being siphoned off to international buyers has kept U.S. inventories from overfilling and Henry Hub prices from collapsing further.
The strain on U.S. supply from LNG exports is starting to raise concerns about competition with domestic usage. U.S. power producers are adding a large amount of gas-fired generation capacity (encouraged by policy shifts), which means more gas will be burned at home for electricity in the coming years. Physical spot prices in key producing regions have firmed up due to LNG facilities drawing heavily.
In today’s market, Europe must compete with Asia for every marginal LNG cargo, and this dynamic influences price formation. If Asia’s demand (and price) were to shoot up due to a heatwave or supply crunch, Europe could quickly find itself facing tighter LNG supply and rising prices as cargoes get diverted east. European buyers might then need to bid up to attract shipments. Conversely, if Europe’s winter risks loom larger (say a cold spell or geopolitical event), European prices would rise to pull in more LNG at Asia’s expense. High LNG exports from the U.S. and elsewhere are effectively the tie that binds these regions: they ensure that a change in one region’s demand is felt globally via price movements. For now, Europe’s ample storage and continued imports are cushioning its market, but any shock to the LNG supply/demand balance (such as unplanned outages at export terminals or sudden Asian buying sprees) could jolt European prices upward.
Asia’s robust demand for LNG is a critical driver of global gas trade, and recent trends show a notable surge in U.S. LNG cargoes heading east. According to commodity flow data, Asia’s imports of U.S. LNG are on track to hit about 2.01 million metric tons in August – the highest monthly volume in eight months. More strikingly, preliminary schedules indicate Asian imports of U.S. LNG could jump to 3.61 million tons by October, which would be the second-highest on record (only below Feb 2021). The majority of these cargoes appear destined for North Asian markets, particularly Japan and South Korea. This uptick is partly market-driven (summer/fall demand) and partly the result of trade agreements: both Japan and South Korea have pledged to significantly increase their energy imports from the U.S. as part of recent negotiations with President Trump. South Korea, for example, announced a plan to buy $100 billion worth of U.S. energy products (LNG, oil, etc.) over an unspecified timeframe. These political commitments are now manifesting in real cargo bookings – Asian buyers are ramping up purchases of U.S. LNG cargoes, boosting export volumes. In summary, high LNG exports – driven by Asian buying – are a bullish factor for gas prices as they signify robust global demand absorbing any available supply.
European Gas Storage Levels: Likely to Surpass 80 Percent by Early Fall
As of August 19, 2025, European gas storage levels stand at about 74.5% full, which is lower than the same date in recent years (2023 at 90.6% and 2024 at 89.9%) but significantly higher than the crisis year of 2021 (63.3%). This means Europe has made solid progress in refilling its reserves through the summer injection season, though the pace has lagged compared to the last two years. The difference reflects stronger summer demand due to heatwaves and high LNG re-exports, as well as tighter competition for cargoes with Asia. The current trajectory suggests Europe will likely surpass 80% by early autumn, giving the region a relatively stable foundation, though not as secure as in 2023–24 when stocks were nearly full before September.
Source: https://agsi.gie.eu/data-visualisation/filling-levels/EU
Currently, European gas storage shows significant regional variation. In Western and Southern Europe, including countries like Spain, France, Italy, and Germany, storage levels are at a high to very high level, providing a strong buffer ahead of winter. Central European countries such as Poland, Austria, and the Czech Republic have reached a solid medium-to-high level, showing good progress though not yet at maximum. In contrast, Northern Europe, particularly Sweden, remains at a low level, while Eastern Europe is at a very low level, highlighting potential vulnerabilities for the coming heating season. Overall, Europe’s core economies are well-prepared, but uneven storage across regions leaves some areas exposed if supply disruptions or a cold winter occur.
Source: https://agsi.gie.eu/data-visualisation/filling-levels-country/map
Conclusion
Over the past week, natural gas prices have shown mixed dynamics between the U.S. and Europe. In the United States, Henry Hub prices hovered near $2.80/MMBtu, dipping below $2.73 midweek before recovering slightly. This weakness was largely tied to mild weather in the Northeast and Midwest, which reduced cooling demand, alongside strong production and ample storage that provided a cushion. Despite regional heat persisting in Texas, Florida, and Louisiana, national demand eased, keeping prices subdued.
In contrast, European benchmark TTF prices strengthened, climbing from near €30.50/MWh to just under €33/MWh (around $10.5–11/MMBtu). This rise reflected strong air-conditioning demand during the ongoing heatwave in Western and Southern Europe, which has increased reliance on gas-fired power generation, particularly as nuclear and hydro outputs faced weather-related limitations. The market also reacted to global LNG flows, with Asia increasing its pull on U.S. cargoes, keeping Europe in competition for available supplies.
In the near term, U.S. gas prices are expected to remain range-bound between $2.70–$3.00/MMBtu, supported by continued strong LNG exports and localized southern heat, but capped by robust storage and easing northern demand. In Europe, prices are likely to stay firm in the $10.5–11.5/MMBtu range as the heatwave sustains cooling demand and storage injections continue at a slower pace. Should Asia’s LNG demand intensify further in late August, upward pressure on both European and U.S.-linked prices could emerge. However, if forecasts of cooler weather in the U.S. and a late-August moderation in European heat materialize, prices may stabilize or soften slightly into early September.