In June 2025, temperature anomalies profoundly impacted the natural gas market in both the US and Europe. With extreme weather events — such as the eruption of the Etna volcano and its atmospheric effects — becoming more common and unpredictable, the demand for natural gas for cooling is likely to fluctuate. In the US, rising temperatures could lead to a higher demand for natural gas as people turn on their air conditioning, pushing prices up. On the other hand, in Europe, a sudden drop in temperatures — like we are eyeing now in Northeastern Europe — may lead to a halt in natural gas consumption for cooling purposes. These temperature swings are expected to pose challenges for LNG suppliers and buyers as they strive to adapt to the shifting market and meet the evolving energy demands of consumers.
Right now, natural gas prices are on a moderate decline, influenced by various factors, including unfavorable weather conditions in the U.S. and Europe, which have resulted in increased gas storage. Additionally, U.S. economic policies, such as the broad impact of Trump tariffs and a significant rise in LNG exports, are also playing a role in this situation.
Gas Supply and Prices: Cold Fronts and Heating Demand
Natural gas markets are riding a wave of volatility, with weather emerging as a dominant force behind recent price swings and stock fluctuations. As of mid-2025, several key weather-related dynamics are shaping the landscape:
Arctic blasts across North America and Europe have driven up heating demand, leading to increased consumption of natural gas. These extreme cold spells have also caused “freeze-offs”— production halts due to frozen wellheads — tightening supply just as demand peaks.
The charts below summarize the statistics:
Current prices vs. price spread 10 days before expiry by month since 2010
Conclusion: The 2025 summer futures contracts are still trading above the median expiration price, but remain within the interquartile range. Winter 2026 contracts declined relative to the previous week but remain higher than 2025, similar dynamics are observed in 2027. The market is slowly but still starting to stabilize.
Current Forward curve compared to 2020—2024
Conclusion: A strong upward bias in the curve remains in 2025 despite the price decline last week. The shape of the curve after 2027 remains more stable, and the decrease in outright contract prices has not altered it. It stays within a price range comparable to the corresponding 2023-2024 curves for the same period of the year.
Current gas inventories and next week's forecast compared to 2019—2024
Conclusion: For the 26th week (June 21-27), we anticipate a 45 BCF increase in storage. The level of filling will be above the median for the previous 5 years. Despite falling pumping rates, if the current supply and demand situation persists, the 2024 peak level is possible. The weather in the 2H of summer remains a constraint.
Storage and Supply Constraints vs. Global LNG Demand and Exports
Heavy withdrawals from underground storage during cold spells have pushed inventories below the five-year average. With production still recovering from weather-related disruptions, the market is bracing for potential shortages, especially if another cold snap hits.
Record U.S. LNG exports are adding to domestic supply pressures. As Europe and Asia scramble for alternatives to Russian gas, U.S. exports have surged, linking domestic prices more closely to global weather and geopolitical events.
Weekly HDD+CDD totals from current NOAA data and forecast for the next two weeks compared to 1994—2024
Conclusion: HDD+CDD values in the first half of June were below the median. Week 27 (June 30—July 6) is expected to remain comparatively hot, relative to the last 30 years. The forecast values for week 28 are on the upper quantile.
Chart Remarks: in candlesticks are the quantiles for the 30 years from 1994 through 2024. Red dots 2024g, green —2025, blue — prediction 2025
Weekly cumulative supply/demand difference vs. 2014—2024
Conclusion: When viewed by region, we see forecast values for the current and following week above average in almost all regions.
Change in monthly weather averages for 10 years from 1990 to 2024
Conclusion: Over the past 30 years, July has become hotter by 20 HDD+CDD units.
Weekly cumulative supply/demand difference compared to 2014-2024
Conclusion: The April-June 2025 supply/demand balance is well below the 10-year median due to low temperatures in the 1H of summer. The last two weeks have seen a trend reversal towards a higher balance above the historical median. At the same time, due to production growth over the last week, we are monitoring whether the increased demand from consumption will be offset by production growth.
Percentage change in Spot and near term futures price relative to the beginning of the year for 2010-2025 by month
Conclusion: Across 15 years of carrying out statistics, July spot and near term futures became traded with minimal price divergence.
Afterword
The natural gas supply and demand balance for the April—June 2025 period has seen significant fluctuations, driven by various factors, including low temperatures in the early summer months and below-median HDD+CDD values in the first half of June. The heavy withdrawals from underground storage during cold spells have contributed to pushing inventories below the five-year average, indicating a tighter supply situation. However, a recent trend reversal has been observed over the last two weeks, with the balance shifting towards a higher level above the historical median. This suggests a potential improvement in the supply/demand dynamics and may indicate a more stable outlook for the natural gas market in the upcoming period.