Is the Weather Forecast Losing Its Bullish Bite?

Traders pulled risk off the table following a cooler shift in U.S. weather models. While much of the southern two-thirds of the country remains hot, with highs in the 90s and low 100s, updated GFS and EC models showed a net reduction of five cooling degree days (CDDs) over the weekend.

Temperatures in the Northeast and Midwest are now expected to moderate from late July into early August, with Vaisala projecting an active storm track that could cap cooling demand during July 31–August 4.

LNG Exports Dip as Gas Supply Trends Higher

Another pressure point for prices is the ongoing softness in LNG exports. U.S. LNG net flows on Monday totaled 14.9 bcf/day, down 4.9% week-on-week, according to BNEF. This drop coincides with signs of stronger supply. U.S. dry gas production reached 107.4 bcf/day to start the week—up 4.8% year-on-year—while rig activity hit a 17-month high of 117, per Baker Hughes.

Storage Data and Demand: Are the Bulls Getting Squeezed?

Last week’s EIA storage report added to the bearish tone. Inventories rose by 46 bcf for the week ending July 11, slightly above consensus and the five-year average of +41 bcf. U.S. gas inventories now sit 6.2% above their five-year seasonal average, despite being 4.9% lower year-on-year.

Meanwhile, electricity demand offers limited support: U.S. power output rose just 1.1% y/y in the latest weekly report, a modest lift relative to expectations for peak summer cooling demand.

Will Technical Levels Offer Support or Fuel a Breakdown?