Can Hotter Forecasts from NatGasWeather Spark a Rally?

Weather remains a pivotal factor. According to NatGasWeather, U.S. demand is expected to be moderate through Thursday before a hotter pattern emerges. Highs in the mid-80s to 100s across much of the country are forecast for late this week and into next, potentially boosting cooling demand.

However, current conditions remain milder than ideal for strong rally attempts. Traders are weighing whether this upcoming heat will be enough to sustain prices above the psychological $3.00 level, especially with robust supplies still in play.

Production and Storage Oversupply Continue to Undermine Bulls

Monday’s selloff — a 15.1-cent drop to $2.932 — was fueled by a mix of bearish fundamentals. U.S. dry gas production hit 108.1 Bcf/d Monday, up 3.5% year-over-year, while demand fell 8% to 74.2 Bcf/d, according to BNEF.

Storage is another headwind: the latest EIA report showed a +48 Bcf injection, outpacing the five-year average of +24 Bcf, and pushing inventories to 6.7% above seasonal norms. The fall shoulder season also looms, historically a soft period for demand.

Baker Hughes Rig Count and LNG Exports Send Mixed Signals

The Baker Hughes rig count adds further pressure, with gas rigs rising by two to 124 — the highest in two years — signaling continued production strength. At the same time, LNG export flows remain elevated at 15.3 Bcf/d, up 6.8% week-over-week, offering some relief to domestic balances.

Meanwhile, Edison Electric Institute data showed an 8.1% year-over-year increase in power generation for the week ending July 26, potentially supporting incremental gas burn for utilities.