US gas prices decline amid rising inventories and subdued demand

US natural gas prices experienced downward pressure last week due to elevated storage injections, sluggish domestic demand, and cooler-than-expected June weather. The latter currently shows limited potential to stimulate consumption growth.

The latest EIA report revealed a 101 billion cubic feet (Bcf) build in domestic storage for the week ending May 23, surpassing the 5-year average of 98 Bcf. Total stored gas now stands at 2.476 trillion cubic feet (Tcf), exceeding seasonal norms by 3.9%. This surplus has narrowed the year-on-year deficit to 11.7%, underscoring persistent oversupply as production outpaces demand. This supply-demand imbalance hints at a pessimistic outlook for gas prices.

Projected peak temperatures in key demand hubs, including Texas and the Midwest, are expected to range from 59 to 68 degrees Fahrenheit (15 to 20 degrees Celsius). This figure is below seasonal averages, insufficient to drive meaningful cooling demand. 

Concurrently, gas consumption in the power sector continues to weaken. The Edison Electric Institute reported a 4.4% year-on-year decline in electricity generation for the week ending May 24, reflecting reduced reliance on gas-fired power plants.