Gas Prices Rise as Storage Tightens and Heat Spikes

Natural gas values jumped to a two‑and‑a‑half‑month peak, closing higher on Thursday after the U. S. Energy Information Administration reported a smaller than expected rise in storage levels. Inventories grew by 92 billion cubic feet (bcf) for the week ending May 22, falling short of analysts’ 96 bcf forecast. The surprise was amplified by new weather models that predict hotter temperatures across the West and Midwest through early June, which could push electricity firms to use more gas for cooling. The market also feels pressure from a forecast of increased U. S. production: the EIA lifted its 2026 dry‑gas output estimate to 110. 61 bcf/day, up from 109. 60 bcf/day in April. Production is near a record high, with drilling rigs hitting a 2½‑year peak in late February. Meanwhile, the Strait of Hormuz remains closed, cutting Middle Eastern supplies and giving U. S. exporters a chance to fill the gap. U. S. data from BNEF shows that dry‑gas output in the lower 48 states rose 2. 6 % year‑over‑year to 110. 4 bcf/day, while domestic demand climbed 2. 1 % to 70. 2 bcf/day. Liquefied natural‑gas (LNG) imports to U. S. terminals added 18. 5 bcf/day, a 2. 2 % week‑over‑week increase.Global supply concerns add to the upward pressure. Qatar’s Ras Laffan plant, which supplies about 20 % of worldwide LNG, suffered a 17 % loss of capacity after an Iranian attack. Repairs could take three to five years, tightening the global LNG market and encouraging U. S. exporters to step in. The war‑related closure of the Strait of Hormuz has also limited gas shipments to Europe and Asia. Electricity generation data from the Edison Electric Institute shows a 5. 2 % year‑over‑year rise in U. S. output for the week ending May 23, indicating higher overall demand that could support gas prices. The EIA’s latest report confirmed storage levels were only slightly above the five‑year seasonal average, leaving ample supplies but still hinting at tighter conditions. European storage sits at 39 % of capacity, below the 53 % seasonal average. In drilling activity, Baker Hughes reported a modest drop in active U. S. gas rigs to 125 for the week ending May 22, a small decline from the February high of 134 rigs. Over the past 19 months, rig counts have climbed from a four‑and‑a‑half‑year low of 94 in September 2024. Overall, the combination of modest storage gains, rising production forecasts, weather‑driven demand, and global supply disruptions is keeping natural gas prices on an upward trajectory.