July’s expiration price was the highest since the February contract rolled off the board at $7.46, bringing the average 2026 settlement to $3.863 per MMBtu. This also marks the fifth consecutive NYMEX contract to expire south of the corresponding month in 2025, although the July 2026 expiration was just 3 cents below July 2025.

With the most significant heat of the season on tap for next week, demand from power generators should hit summer highs. So far, the market appears to be in wait-and-see mode regarding forecasts beyond next week. Any extension of major heat would help fuel bullish sentiment, while a reversion to a milder temperature outlook would likely keep prices rangebound.

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Temperature forecasts continue to point toward the strongest heat of the season across the eastern two-thirds of the country next week. This should promote new summer highs for peak load conditions across most ISOs and drive heavy natural gas demand for power generation. So far, this has only been enough to bring summer natural gas futures to the top of the recent trading range, with any breakout likely dependent on the ultimate intensity and duration of the heat wave.

Today’s storage report showed a 76-Bcf build into natural gas inventories. The build was essentially in line with the five-year average for the same week, while falling short of the 96-Bcf year-ago build. Inventories remain at a steady cushion to average levels, but the pace of storage growth continues to consistently lag 2025. Next week’s report should show a sizable injection before hot weather weighs more heavily on storage builds in the following weeks.

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Warmer weather expectations are still offering support, with above-normal temperatures becoming more established across the eastern two-thirds of the U.S. over the next couple of weeks. The market is also looking ahead to tomorrow’s EIA storage report, with analysts expecting a 70-Bcf build for the week ended June 19. That would come in slightly below the five-year average of 75 Bcf, trimming the surplus to 146 Bcf while leaving inventories 55 Bcf below year-ago levels. The setup keeps storage in comfortable shape overall, but with less room for error if cooling demand continues to strengthen.

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Both the prompt-month continuation and the Winter 2026-27 strip remain well within their respective June trading ranges as the market continues to seek direction amid mixed fundamental signals. With LNG exports weighing heavily on net supply and temperatures heating up, the next several weeks will be telling for the trajectory of mid-summer storage growth. If inventories can maintain their cushion to the five-year average, it would ease some concerns and likely keep a lid on prices. On the other hand, if inventories begin losing ground to that benchmark and fall further behind year-ago levels, the market could see a break to the upside.

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The main supportive factor remains the warmer shift in the weather outlook, with above-normal temperatures continuing to solidify across the eastern two-thirds of the country. Forecasts are still pointing toward a more significant ramp in cooling demand over the next two weeks, particularly across major population centers in the Midwest and East. So far, though, the pattern has not been extreme enough to push the market decisively higher. With storage still healthy and prices already off of recent lows, the market appears to be waiting for more confirmation that upcoming heat will translate into a tighter supply-demand balance before breaking out of sideways price action.

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Today’s EIA storage report came in about as expected, with a build of 73 Bcf for the week ended June 12. This held inventories steady relative to the five-year average, while stocks slipped further below year-ago levels. The storage situation remains healthy heading into peak summer, but the tight underlying balance would become more important if significant heat starts showing up in the forecast.

On that note, we did see a warmer shift in the two-week outlook. While there is still no major heatwave in the works, cooler-than-normal weather is now expected to dissipate near the end of the two-week period and give way to a warmer-than-normal bias in the East. If this trend continues, it will exacerbate seasonal demand growth as the market transitions into July.

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Tomorrow’s storage report is expected to show another above-normal injection. According to a Wall Street Journal survey, inventories are expected to increase by 82 Bcf for the week ended June 12, with estimates ranging from 66 to 117 Bcf. A build in line with consensus would expand the surplus versus the five-year average to 160 Bcf from 151 Bcf the week prior. However, it would also widen the deficit versus year-ago levels to 20 Bcf from 5 Bcf, reflecting the continued tightness versus 2025 even as storage remains healthy by historical standards.

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Amid a general lack of direction from weather forecasts, the market is finding support from a tighter net supply setup. While domestic production continues to hold steady around 110 Bcf per day, imports from Canada have lagged historical levels and the U.S. LNG export fleet is ramping back up following spring maintenance. This combination has weighed on net U.S. supply, which is lagging year-ago levels. If extended heat starts showing up in near-term forecasts against this backdrop, it could provide a jolt of bullish sentiment.

LNG feedgas was estimated at 19.5 Bcf per day on Tuesday, well above the levels closer to 17 Bcf per day registered in recent weeks. Several major terminals are still operating below demonstrated capacity, meaning there is room for further increases in feedgas demand as the summer progresses.

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With near-term weather forecasts showing no signs of major heat across key demand areas, the market appears content to drift mostly sideways while awaiting a catalyst. If mild weather appears poised to linger into mid-July, traders may begin reassessing seasonal risk and bracing for a stronger end-of-season storage peak. However, if signs of an extended heat wave emerge amid the current tighter underlying fundamental balance, that could help the market break out of its recent range to the upside.

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Power generation demand is expected to decline in the coming days after reaching new seasonal highs above 46 Bcf per day this week. Beginning tomorrow, temperatures are forecast to turn much milder following the brief heat wave during the second half of this week. This pattern change has helped ease the bullish momentum that developed last month and allowed the market to settle into a holding pattern. Market participants will be watching for signs of another round of major heat in the coming weeks, but for now, near-term forecasts are largely unsupportive.

LNG export demand rebounded at the end of the week, with estimated feedgas deliveries to the nation’s liquefaction terminals exceeding 19 Bcf per day on Friday. Most active facilities appear to be returning from maintenance-related outages, although the nation’s largest terminal, Sabine Pass, remains well below its demonstrated capacity.

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Today’s storage report added to the bearish tone, with the EIA announcing a 108-Bcf injection for the week ended June 5. The build came in above consensus expectations and the five-year average of 95 Bcf, expanding the storage surplus versus that benchmark to 151 Bcf while leaving inventories roughly in line with year-ago levels. Compared with the prior week’s 95-Bcf injection, the report suggests the fundamental balance loosened by nearly 2 Bcf per day. It was the largest weekly build of the season so far and pointed to weaker natural gas consumption than preliminary estimates had implied, potentially reflecting stronger-than-expected wind and solar generation.

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With temperatures warming across the populous East in the coming days, we expect power generation demand to reach new season-to-date highs above 45 Bcf per day. Peak loads across eastern power markets are also expected to establish new high-water marks for the summer before temperatures moderate considerably during the 6–10-day period, lowering energy demand considerably.

Tomorrow’s storage report is expected to show a larger build than the previous week, according to The Wall Street Journal’s survey of analysts. Consensus forecasts center on a 100-Bcf build, with responses ranging from 90 to 116 Bcf. If the consensus estimate materializes, stocks would add 5 Bcf to the surplus versus the five-year average while expanding the deficit to year-ago levels by 10 Bcf. This would mark the seventh consecutive week in which inventory growth has lagged the comparable week in 2025.

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Fundamentally, there was not much new for the market to digest. The next few days still look hot across the East, which should keep power generation demand well supported in the near term. However, forecasts continue to lean toward a much milder pattern beyond that initial heat, especially across the middle of the country. That shift has helped keep the market from continuing higher, with traders still waiting for stronger seasonal weather signals to help dictate near-term price direction.

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Today’s price action comes ahead of the most significant heat so far this season moving through the Midwest and East in the coming days. Power generation demand is expected to hit new summer-to-date highs later this week alongside unseasonably hot weather across key population centers. However, unlike last week’s outlooks, which suggested heat would stick around in the wake of this event, revised forecasts now show a much milder pattern taking shape across the middle of the country beyond the next five days. This has led to a reframing of demand expectations for mid-June and could support stronger storage growth deeper into the month.

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The move lower came despite the market still staring down the most significant heat of the season so far next week. Forecasts softened slightly compared to Thursday’s outlook, which likely helped take some of the urgency out of the rally, but temperatures are still expected to run warm enough across key population centers to push cooling demand meaningfully higher. Power generation demand has already been running near the strongest levels of the season and should climb further as next week’s heat arrives.

An archive of Daily Natural Gas Market Notes can be found here.

The rally was supported by a warmer shift in the forecast, with outlooks now showing more significant heat across key consuming regions than yesterday’s model runs. The change increases the likelihood of stronger cooling demand and elevated power burn as the market moves deeper into June. If current forecasts come to fruition, the near-term weather setup should yield the highest power generation demand of the summer so far.

Today’s storage report also helped support pricing. The EIA announced a 95-Bcf injection for the final full week of May, which was well shy of the year-ago build of 119 Bcf and also below the five-year average of 101 Bcf. Inventories have now erased the mid-April surplus to last year and sit modestly below year-ago levels for the first time since February.

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Temperature forecasts continue to favor widespread warmer-than-normal anomalies beginning in the next several days and stretching beyond mid-month. While no major heat waves appear to be on the horizon, current outlooks are conducive to elevated air-conditioning needs across much of the U.S., which should continue to support strong power burn for natural gas.

Tomorrow’s storage report is expected to show the third triple-digit build of the season. The Wall Street Journal’s survey of analysts showed consensus expectations for a build of 105 Bcf, which would be the strongest of the season to date. The responses came in an especially wide range, spanning from 91 to 131 Bcf, indicating some market uncertainty heading into the weekly EIA report.

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Weather forecasts were little changed overnight, with above-normal temperatures still expected across key areas but without the kind of intense heat that would materially tighten balances in the near term. That leaves market dynamics mostly unchanged, as warmer weather is supportive, but not yet hot enough to drive a major move higher. For now, the curve remains stronger since this point last week, with strong seasonal support likely helping keep pricing propped up as peak summer approaches.

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The rest of the curve was more stable. Winter 2026–27 slipped just a penny on the day but remains up 14 cents on the week, while Winter 2027–28 actually added a penny and continues to hold near $4.09 per MMBtu. That split reinforces the recent theme of near-term volatility around summer weather and prompt-month positioning, while the market continues to preserve a meaningful premium in the winter strips.

Weather forecasts were little changed from Friday, with no obvious fundamental catalyst behind the move lower. Temperatures are starting to warm across key consuming regions, which should begin to lift cooling demand as the market moves deeper into June. Given the recent rally across the front of the curve, today’s weakness looks more like a near-term correction than a meaningful shift in the fundamental backdrop.

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Summer contracts finished the month meaningfully higher, with July up about 35 cents and the remainder of the season up about 28 cents, while deferred strips were flat to slightly lower. Winter 2026–27 slipped about 2 cents on the month, and 2027 and 2028 each finished modestly lower. The market continues to treat the recent bullish shift as a near-term summer issue rather than a full-curve repricing.

Weather remains the main driver heading into June. Forecasts are setting up for a warmer shift across the East, which should help lift cooling demand after a stretch of milder conditions across major population centers. Texas, however, still looks to be spared from significant heat in the near term, limiting the upside risk for power burn.

An archive of Daily Natural Gas Market Notes can be found here.