Will Storage Surpluses and LNG Keep Bears in Control?

Ample storage continues to weigh on bulls, with the latest EIA data showing U.S. inventories up 6.2% above the five-year average, despite being down 5.8% year-over-year.

The latest injection of +55 Bcf surpassed consensus, reinforcing the market’s view that supply is not a constraint.

Eli Rubin at EBW Analytics noted that the combination of “lofty storage surpluses and weak Henry Hub spot realizations” may keep bears in charge, especially given uneven LNG flows, which fell 2.5% week-over-week to 15 Bcf/day on Tuesday.

Lower-48 dry gas production remains robust at 104.8 Bcf/day, up 3.9% year-over-year, while demand fell 6.8% to 77.9 Bcf/day, underscoring the imbalance pressing prices lower.

How Are Weather and Wind Generation Influencing Demand?

NatGasWeather highlighted strong heat for July 7-13, with highs in the mid-80s to 90s across much of the U.S., including 100s in the West and Plains, supporting high near-term demand.

However, forecasts have cooled for the central U.S. for July 13-17 and for the East July 18-22, pressuring futures lower on expectations of reduced power burn for air conditioning.