As of mid-July 2025, the U.S. natural gas market is facing a decline in prices due to the dry mid-summer conditions prevailing across the nation, with a net increase of 53 Bcf in total working gas stored underground across the Lower 48 states from the previous week. Looking ahead, Texas is anticipating a return to dry weather while the western U.S. is bracing for above-normal temperatures for the remainder of July. These weather patterns are expected to have a moderate impact on natural gas supply and demand dynamics, shaping the market trends for the coming weeks.
Currently, natural gas prices are falling, this is influenced by the following factors:
• weather conditions in the U.S. and Europe;
• increase in gas storage.
Storage Levels USA: Within the Five-Year Historical Range
As of July 4, 2025, the total working gas in underground storage across the Lower 48 states reached 3,006 billion cubic feet (Bcf), according to the U.S. Energy Information Administration (EIA). This marks a net increase of 53 Bcf from the previous week. While storage levels remain comfortable within the 5-year historical range, they are 184 Bcf lower than the figure posted during the same period last year and 173 Bcf above the 5-year average of 2,833 Bcf. This indicates that while inventories are not at record highs, they still offer a significant buffer entering the peak summer cooling season.
Regionally, the South Central holds the largest share at 1,158 Bcf, followed by the East (610 Bcf) and Midwest (710 Bcf). Notably, the Midwest region is down 10.9% compared to the same period last year, a sharp decline reflecting stronger power burn and cooling demand in that area. The Mountain and Pacific regions, in contrast, have seen slight year-over-year increases of 5.3% and 1.4%, respectively.
In summary, the U.S. natural gas storage situation is adequate but tightening, with strong summer demand gradually narrowing the year-over-year surplus.
Weather Conditions: Anomalously Hot Compared to Historical Norms
Despite widespread heat across much of the United States, the past week was marked by several dangerous weather events. A tropical depression formed near the southeastern coast on Friday and intensified over the weekend into Tropical Storm Chantal. By Sunday, July 6th, Chantal made landfall in South Carolina, bringing torrential rains and strong winds. As the storm progressed inland, it reached North Carolina and Virginia by Monday. The prolonged heavy rainfall led to significant flooding in several areas, even causing property damage and transportation disruptions.
Source: https://www.nhc.noaa.gov/graphics_at3.shtml?cone
In Texas, a mid-level storm system delivered intense rainfall in a matter of hours, triggering a devastating flash flood. The sudden deluge resulted in over one hundred fatalities and caused billions of dollars in damages, making it one of the most severe flooding events in the state this summer. While extreme heat continues to affect the Western and Southwestern states, where temperatures soar and demand for cooling remains high, southern and southeastern regions are seeing frequent thunderstorms and heavy rains, which are locally suppressing daytime heat.
Source: https://www.spc.noaa.gov/products/exper/enhtstm/
The remainder of July is expected to bring dry conditions back to Texas, while residual rain from Chantal moves into the Mid-Atlantic, limiting heat buildup in the East. In the coming days, frontal systems may also bring bouts of heavy rain and localized flash flooding from the Corn Belt through the Midwest, Ohio Valley, and Appalachians, keeping weather-related risks elevated across several regions.
Source: https://www.weather.gov/sjt/WeatherMap#
The western U.S. is expected to experience above-normal temperatures, with the Intermountain West and parts of the Pacific Northwest showing the highest probability for excessive heat — especially in Montana, Idaho, and Wyoming. This suggests sustained heatwaves in these regions, reinforcing high cooling demand. In contrast, the Central U.S., particularly parts of the Midwest and Great Lakes, including Michigan, Illinois, and Wisconsin, are forecast to see below-normal temperatures. Southern states, including Texas, Louisiana, Mississippi, Alabama, Georgia, and Florida, are leaning toward above-normal warmth, though the signal is weaker. Meanwhile, much of the East Coast – especially the Northeast (e.g., New England and coastal New York) – is also expected to see above-normal temperatures, supporting sustained demand for electricity and natural gas for cooling. The West Coast, particularly California, is forecast to remain near normal, offering a brief respite from excessive heat for that region. Alaska shows a split pattern: the southern part of the state leans toward below-normal temperatures, while the northern and western parts are more likely to experience above-normal warmth.
Source: https://www.cpc.ncep.noaa.gov/
Overall, this outlook indicates strong regional contrasts, with the Western and Southeastern U.S. under persistent heat pressure, the Midwest experiencing a cool-down, and the Northeast trending warmer again.
Cooling Degree Days (CDD) is a weather-based metric used to estimate energy demand for cooling buildings. CDD values have increased steadily since spring, with a particularly sharp rise from mid-May through July 2025. Among individual states, Florida (FL) and Texas (TX) show the most sustained and elevated CDD values, each recording 127 days of CDD activity per week, emphasizing their ongoing exposure to intense heat. Louisiana (LA) also stands out with 135 CDD days, the highest among all, highlighting extreme humidity and warmth in the Gulf region. New York (NY), while cooler than the southern states, still experienced 77 CDD days, suggesting elevated summer demand even in the Northeast. Meanwhile, California (CA) recorded a more moderate 63 days, consistent with its generally milder West Coast climate.
In summary, the data confirms a nationwide surge in cooling demand, driven by above-normal temperatures, particularly in the South and Southeast. This trend translates into heightened natural gas usage in the power sector, as gas-fired plants ramp up to meet record-setting electricity consumption across heat-exposed states. The sustained high CDD levels underscore the bullish impact of weather on natural gas markets during mid-summer. This heat has resulted in significantly elevated demand for air conditioning, thus increasing electricity consumption and natural gas usage for power generation.
Importantly, the CDD values have remained above the upper bound of the 2σ range during multiple intervals, emphasizing how current weather conditions are anomalously hot compared to historical norms. This reinforces a bullish environment for natural gas markets, as higher-than-average cooling loads intensify pressure on the power sector and support continued strong gas burns. If this trend continues, it may lead to further drawdown of surplus gas in storage and upward pressure on prices, especially if accompanied by any supply disruptions.
Europe: Mixed Weather Patterns
In Europe, weather patterns are more mixed. Central Europe is forecast to experience mild and humid conditions, with below-average temperatures prevailing over the current and following week. Meanwhile, Eastern and Northern Europe are under the influence of a high-pressure ridge, which brings warm and dry weather. Some parts of Southern Europe will also see positive temperature anomalies, indicating warmer-than-normal conditions. Looking further ahead, a broader shift toward hotter and drier weather is expected to spread across much of the continent, increasing energy demand, especially in southern countries reliant on air conditioning.
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Europe/temperature.shtml
U.S. Production and LNG Exports: High Levels amid Declining Rig Count
U.S. dry natural gas production remains at historically high levels but has shown a notable short-term decline in early July. While production averaged a record 106.4 Bcf/d in June, and initially rose further to 106.7 Bcf/d at the start of July, recent data indicates a meaningful drop. By July 9, daily output had decreased to around 104.5 Bcf/d, a decline of approximately 3 Bcf/d over six days. However, it marks a shift worth watching, especially if the downward trend continues.
On the supply-side corporate front, there are signs that producers are exercising restraint in response to low prices. The U.S. gas rig count has been declining for several weeks – Baker Hughes counted 111 active gas rigs as of late June, which is down from earlier this year (though still a dozen above year-ago levels). Some exploration and production companies are pulling back. For instance, APA Corp (Apache) announced it curtailed about 10 MMcf/d of its U.S. natural gas production in Q2 due to weak prices, effectively choking back some output until prices improve. APA realized an average of only about $1.00 per Mcf for its U.S. gas in Q2 – illustrating how low domestic prices had fallen – and chose to scale down production in response. Similarly, other shale operators have indicated plans to reduce drilling activity in the second half of 2025 amid price uncertainty. If such cuts become more widespread, the torrid pace of production growth could level off later in the year.
Indeed, total U.S. gas demand (including residential/commercial, industrial, and exports) is projected to average 87–88 Bcf/d in July, very close to the all-time monthly demand record of 88.8 Bcf/d set in July 2024. Week by week, the trend is rising: Refinitiv (LSEG) expects total U.S. gas demand (including exports) to increase from ~106.8 Bcf/d this week to 108.1 Bcf/d next week as more intense heat grips the country. This level of consumption is well above normal for mid-July and reflects both scorching weather and higher LNG export flows.
The U.S. Energy Information Administration notes that overall electricity use is on track to set new record highs in 2025 and 2026, implying structurally strong power-sector gas burn. However, as renewables expand, EIA expects natural gas’s share of generation to dip slightly (from ~42% in 2024 to ~40% in 2025) – a gradual change that won’t be felt in the immediate 1–3-week horizon, but worth watching longer term.
Liquefied natural gas exports continue to be a significant demand outlet for U.S. gas and are trending upward again as the maintenance season passes. By early July, however, feedgas flows had ramped back up to roughly 15.6 Bcf/d. This rebound aligns with reports that LNG facilities are coming out of maintenance, providing “fundamental support” to the market as export demand increases. For example, routine maintenance at Cheniere’s Sabine Pass and Corpus Christi export plants concluded around the end of June, contributing to higher feedgas consumption in recent weeks. Current feedgas volumes remain about 13% below the single-day peak of 17.3 Bcf/d seen in April, but the overall trend is upward.
The EIA’s latest outlook (July STEO) projects U.S. LNG exports will average 14.6 Bcf/d in 2025, up from an expected record ~11.9 Bcf/d in 2024, as additional Gulf Coast export trains come online. In the immediate term (next few weeks), LNG feedgas intake should remain strong in the mid- to upper-15 Bcf/d range, assuming no new disruptions. Global gas market conditions (like European storage and Asian demand) will influence cargo economics, but summer U.S. LNG exports are largely running at max capacity. This steady outflow of gas is a bullish factor for the U.S. supply-demand balance – effectively removing a large volume of domestic gas and tightening available supply for the U.S. market. However, it’s worth noting that any unexpected outage at an LNG facility (for example, from storms or technical issues) could quickly curtail feedgas demand and temporarily loosen the U.S. market. Barring such events, the resumption of full LNG export operations is expected to support U.S. prices by keeping demand elevated.
European gas storage levels: Significantly Lower than the Same Period in 2023
European gas storage levels stand at approximately 60.98% full, which is significantly lower than the same period in 2023 (78.64%), 2024 (78.99%), and 2020 (82.28%). The current trajectory reflects slower injection rates compared to previous years, suggesting potential concerns about refill adequacy ahead of the 2025–2026 winter season. While storage is still well above the low point seen in 2021 (49.55%), the gap compared to recent high-stock years is widening. If injection rates do not accelerate in the coming weeks, Europe could enter the heating season with below-average reserves, which may increase vulnerability to supply shocks or price volatility during cold snaps. The trend highlights the importance of monitoring LNG imports, domestic demand, and weather patterns to ensure sufficient pre-winter storage buildup.
Source: https://agsi.gie.eu/data-visualisation/filling-levels/EU
The latest European gas storage map reveals significant regional disparities in storage fill levels as of early July 2025. Southern European countries, such as Spain, Portugal, and Italy, have storage levels well above 80%, indicating strong preparedness ahead of the winter season. Central European countries such as France, Germany and Austria are in the slightly below average range, reflecting more or less steady progress in terms of injections.
However, Eastern and Northern Europe present a more concerning picture. In countries such as Sweden, Finland, Estonia, Latvia, Lithuania and some regions of South-Eastern Europe (e.g. Bulgaria and Romania), storage levels are low. This underlines potential vulnerability in the event of a colder-than-expected winter or supply disruptions.
Source: https://agsi.gie.eu/data-visualisation/filling-levels-country/map
These imbalances could lead to localized energy security risks, particularly in the north and east of Europe, if summer refill efforts do not intensify.
Conclusion
Natural gas markets have shown diverging dynamics in the U.S. and Europe over the past week. In the U.S., Henry Hub futures are trading at $3.28/MMBtu, recovering slightly from a midweek dip toward $3.15, reflecting the push-and-pull between strong cooling demand and comfortable storage levels. In the short term (1–3 weeks), U.S. prices are expected to hover between $3.10 and $3.50/MMBtu, with upward pressure from continued heat and LNG exports, but capped by ample supply.
Meanwhile, in Europe, the Dutch TTF benchmark has steadily climbed, currently priced at €35.10/MWh ($11.11/MMBtu), amid concerns over below-average storage refill in several Eastern and Northern European countries and strengthening Asian LNG competition. Despite overall European gas storage at 61%, regional disparities and heat forecasts are driving localized demand. Should refill rates remain slow, further upward momentum is likely. Over the next 1–3 weeks, TTF prices are expected to remain in the €34–36/MWh range ($10.76–11.40/MMBtu), with potential to rise if supply tightens or heat intensifies.
Overall, both markets are weather-sensitive, and forecasts of sustained heat in the U.S. and Southern Europe suggest continued strong energy demand, especially for air conditioning. While supply fundamentals keep prices in check for now, any supply-side disruption or intensified heatwave could tilt the balance to become more bullish.