Currently, natural gas prices are on a downward trend, primarily influenced by high production. Despite widespread and unusually hot weather across key consuming regions - which boosts demand for gas-fired power generation - natural gas prices continue to decline. This counterintuitive trend is driven by huge US production volumes. High output leads to significant injections into storage facilities even during a period of elevated cooling demand and significantly reduces risks of natural gas shortage in winter. Additionally, the high volume of LNG exports has further intensified the competitive market dynamics, as more supply is being directed towards global markets.
Storage Levels USA: Comfortable Within the Historical Range
According to the U.S. Energy Information Administration (EIA), as of June 27, 2025, U.S. natural gas storage in the Lower 48 states reached 2,953 billion cubic feet (Bcf). This marks a weekly net increase of 55 Bcf, reflecting strong injections amid robust supply and moderate early-summer demand. Current storage levels are 176 Bcf below the same period last year but remain 173 Bcf above the five-year average of 2,780 Bcf, placing inventories comfortably within the historical range.Â
Regionally, the largest weekly builds occurred in the Midwest (+23 Bcf) and East (+13 Bcf), while the Salt subregion saw a rare net withdrawal of -10 Bcf, likely due to heat-driven cooling demand. Despite lower year-over-year stock levels, the current position reflects a healthy buffer heading into peak summer demand and suggests that, barring extreme weather events, the U.S. remains well-positioned in terms of underground gas inventories.
Weather Conditions: Above-Normal Temperatures Prevail
United States: Much of the Western U.S., particularly the Southwest, California, and the Rockies, is forecast to experience significantly above-normal temperatures. This will drive substantial electricity consumption for air conditioning, increasing natural gas use by power generators. Similarly, the Southeast, including Florida and the Carolinas, is expected to remain hotter than normal, further reinforcing high cooling demand. In contrast, the Central U.S.—notably parts of the Midwest and Plains — is projected to see below-normal temperatures, which may temporarily ease local gas consumption. The Northeast and Mid-Atlantic show a weaker but noticeable trend toward warmer-than-average conditions, suggesting moderate increases in gas demand.Â
Source: https://www.cpc.ncep.noaa.gov/Â Â
Following the breakdown of a heat dome, stormy weather returned to the central, eastern, and southeastern parts of the U.S. Thunderstorms stretched from the Great Lakes down to the Southern Plains and gradually shifted eastward, bringing showers, strong winds, and hail from the Mid-Atlantic to Texas.
Source: https://www.spc.noaa.gov/products/exper/enhtstm/Â Â
Currently, the U.S. climate is heavily influenced by monsoonal moisture. A moist air mass linked to Hurricane Flossie in the eastern Pacific is increasing rainfall chances in the Southwest. Flossie is expected to gradually weaken as it continues moving away from the coast of Mexico. The storm is forecast to downgrade from a tropical storm (S) to a tropical depression (D) by late Thursday into Friday, with sustained winds dropping below 39 mph. While Flossie is not expected to make landfall or significantly impact major energy infrastructure directly, it is contributing to increased monsoonal moisture across the southwestern United States and northern Mexico. This moisture could enhance rainfall in the Desert Southwest and eastern Pacific coastal areas, possibly leading to localized flash flooding. At the same time, hot and dry conditions are setting in across the Northwest. As the monsoon weakens over Mexico, dryness from the Northwest is expected to spread into parts of the Midwest, offset by heavy rains in the Southeast and Mid-Atlantic states.
Source: https://www.nhc.noaa.gov/refresh/graphics_ep1+shtml/030833.shtml?cone#contents Â
In the upcoming week, upper-level troughs will trigger convective rainfall over the North-Central Plains, Upper Midwest, and Northeast. A stalled front in the Southeast, combined with anomalously moist tropical air from the Gulf, will cause excessive rainfall in Florida. Despite localized storms, most of the Southeast will continue experiencing typical summer heat and humidity. Above-normal temperatures are also anticipated in the Central states, the Mid-Atlantic, and New England.
Source: https://www.cpc.ncep.noaa.gov/Â Â
In the Southern Hemisphere winter, Argentina is grappling with its coldest weather in 30 years, which has caused a sudden surge in heating demand. Households cranked up gas usage as temperatures plummeted, with the national gas regulator expecting demand on July 2 to run about 25% higher than the same day a year prior. This spike has strained Argentina’s gas system to the point that the government ordered cuts to industrial gas supply to preserve fuel for residential heating. On July 2, distributors were forced to interrupt service to certain compressed natural gas filling stations and factories. The immediate impact of this cold snap is largely regional – Argentina and neighboring Chile and Uruguay even saw unusual snowfall in some areas – but it underscores how extreme weather can rapidly tighten a gas market. In Argentina’s case, the industrial curtailments free up gas for homes, but at the cost of economic output. If the cold wave persists, Argentina may need to seek additional LNG imports or pipeline gas from neighbors, which could marginally affect the Atlantic LNG market.Â
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Argentina/temperature.shtml Â
Cooling Degree Days (CDD) are a widely used metric to estimate energy demand for air conditioning. The data show a clear seasonal upward trend, with CDDs sharply rising from mid-April through the end of June 2025, signaling a sustained period of high temperatures. Specifically, over the past week, the total number of CDD days was highest in Louisiana (136) and Texas (129), indicating extreme and persistent warmth. Florida (116) also recorded high values, consistent with its hot and humid summer climate. Meanwhile, New York (69) saw moderate CDD accumulation, and California (40) remained relatively cooler with a mild coastal influence. The weighted national CDD index also climbed steadily during this period, confirming widespread hot conditions across major population centers. This temperature profile directly translates into higher natural gas consumption for electricity generation, reinforcing upward pressure on gas demand and prices in the power sector.
Notably, CDD values surged around June 21, peaking significantly above both the historical mean and the upper edge of the typical variability range. This pattern reflects a broad and sustained heatwave, especially in the last week of June and early July, which is driving exceptionally high air-conditioning demand.
From a natural gas perspective, this elevated CDD trend directly correlates with increased gas-fired electricity generation. The gap between actual and normal CDDs highlights above-normal weather-driven energy consumption, adding bullish pressure to natural gas markets. With continued elevated temperatures forecast and CDDs expected to remain well above normal, the outlook suggests strong short-term support for natural gas demand in the power sector.
Europe: Unseasonably Warm Weather
Across the Atlantic, Europe has also faced early-summer heat extremes that influence its gas market. The latter half of June was unseasonably warm over most of Europe, culminating in an intense heatwave to close out the month. Portugal shattered its all-time June temperature record at 46.6 °C, while parts of Spain saw highs near 38–42 °C. This extreme heat persisted into the first days of July in many areas, boosting electricity demand as households and businesses turned up cooling systems. Notably, the heat wave helped reverse a downward trend in European gas prices.Â
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Europe/temperature.shtml Â
However, a pattern change is underway: by early July, cooler Atlantic air began pushing into Northwestern Europe, bringing relief to regions like northern France, Benelux, and Germany. As of Thursday (July 3), this cooldown is tempering the heat in parts of Central Europe. Further east, though, temperatures are expected to briefly rise as the hot air mass shifts, and more significant heat waves are likely later in the summer across Europe.
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Europe/temperature.shtml Â
In summary, European gas demand for power generation should ease slightly in the immediate term with the northwest cooling trend, but the overall summer outlook remains warmer than average. Any renewed heat wave (likely in the coming weeks) could again elevate European gas consumption for cooling.
U.S. Production and LNG Exports: Near All-Time Highs
Robust domestic supply continues to anchor U.S. natural gas fundamentals this summer. Production is near all-time highs, and storage inventories are ample – though the rate of injections is starting to slow as cooling demand rises. Lower-48 dry gas output is averaging about 106–107 Bcf/day as we enter July, essentially matching record levels. This is slightly higher (+3–4% year-on-year) than last summer’s production. Minor dips in June output (down from ~106.4 Bcf/d in June to 106.2 Bcf/d in early July) were related to spring pipeline maintenance, but those constraints have largely resolved. In fact, industry data showed a new uptick at the end of June, briefly reaching ~107.4 Bcf/d, signaling that production remains strong and responsive to any price incentives.
After a period of maintenance and outages in the spring, all major LNG terminals have now returned to service, providing a fundamental boost to gas demand. In June, feedgas deliveries to the eight U.S. LNG export plants averaged about 14.4 Bcf/d, down from May’s ~15.0 Bcf/d and a record 16.0 Bcf/d in April when facilities were running at full tilt. The June dip was largely due to scheduled maintenance at several Gulf Coast terminals. With those maintenance projects wrapping up, export volumes are already rebounding: at the start of July, feedgas flows hit roughly 14.7 Bcf/d, a seven-week high. This indicates strong export demand and that U.S. LNG plants are again near capacity, ready to soak up any incremental gas supply. The restoration of LNG export operations is injecting additional demand into the market, underpinning prices from the “demand side” as domestic consumption also rises.Â
European gas storage levels
As of July 1, 2025, European gas storage levels continue to show a solid build-up, reaching approximately 59.15% full. This puts 2025's storage trajectory ahead of the same date in 2022 (58.56%) and 2021 (47.8%), but still notably below the corresponding levels seen in 2023 (77.3%), 2024 (77.66%), and 2020 (80.82%). While this year's pace of injection has been slower than during the record years of 2020 and 2023, the current inventory remains well within seasonal norms. The ongoing storage accumulation reflects steady LNG imports, moderated industrial demand, and a mild spring that reduced early summer drawdowns. With summer heatwaves increasing demand for gas-fired electricity generation across parts of Europe, the next few weeks will be critical in determining whether current injection rates are sufficient to meet EU winter readiness targets. Nonetheless, the storage curve for 2025 is tracking safely above the historical minimum range, suggesting that the continent is not at immediate risk of a shortfall.
Source: https://agsi.gie.eu/data-visualisation/filling-levels/EU
As of early July 2025, countries like Spain, Portugal, and Italy stand out with storage facilities over 81% full, placing them in a highly secure position ahead of the upcoming winter season. In contrast, northern and eastern European countries such as Sweden, Finland, Romania, and the Baltic states are lagging, with storage levels below 40%, indicating potential vulnerability in case of supply disruptions. Central European countries such as Germany, Austria, and Poland are showing steady progress but leaving room for improvement. France and Belgium are showing regional averages, while Ukraine and parts of the Balkans remain in the lower tiers. This uneven distribution highlights the differing levels of supply security and gas infrastructure across the EU, and may shape intra-European gas flows and policy coordination as the injection season continues.
Source: https://agsi.gie.eu/data-visualisation/filling-levels-country/map Â
Conclusion
So, natural gas prices in both the U.S. and Europe have shown moderate volatility over the past week, reflecting a complex balance of weather-driven demand, storage dynamics, and LNG market flows. The U.S. Henry Hub benchmark (USD/MMBtu) settled around $3.45/MMBtu. After peaking near $3.72 in late June, prices retreated amid ample storage and momentary cooling in parts of the central U.S., though recent heat in the West and South is providing support. In Europe, the Dutch TTF benchmark (EUR/MWh) hovered near €34.20/MWh ($10.82/MMBtu), recovering from earlier lows as high temperatures in southern Europe raised cooling demand. Despite regional fluctuations, both markets remain sensitive to short-term weather forecasts, with high CDDs, tropical weather systems, and LNG flows acting as key catalysts. Overall, prices are expected to remain firm in the short term as heatwaves persist and energy systems experience seasonal strain.