Natural Gas Update 6-11-2025

Overview

Natural Gas --NG is up 3.7 cents
NG futures are higher this morning with some heat being teased over the next 1-2 weeks. The tone of the past few sessions though has been negative due to weak LNG demand and strong production. A further 100+ storage build forecast for this week's EIA data has also been seen as a negative.

Lower 48 natural gas demand is estimated today at 69.1 BCF/d, well above the 30-day average of 66.7 BCF/d and the previous five-year average around 65.1 BCF/d for the time of year. (Bloomberg) Temperatures will gradually warm over the next 1-2 weeks, especially across the East. As a result, Gas-Weighted Degree Days (GWDDs) will steadily rise. (Celsius Energy)

The EIA's STEO kept NG price forecasts basically unchanged from last month : 2025 was lowered by 10 cents to $4.02, but the EIA points out that prices are up quite a bit from 2024's average of $2.20 due to strong export growth outpacing US gas production. Yet, the EIA raised their U.S. 2025 production estimate from last month by 1.0 BCF/d to 105.9 BCF/d. The 2026 output forecast is unchanged at 106.4 BCF/d. The agency also projected domestic gas consumption would rise from a record 90.5 BCF/d in 2024 to 91.3 BCF/d in 2025 before easing back to 91.1 BCF/d in 2026. The 2025 demand forecast was unchanged from last month, while that for 2026 was raised by 0.4 BCF/d. The agency forecast average U.S. LNG exports would reach 14.6 BCF/d in 2025 and 16.0 BCF/d in 2026, up from a record 11.9 BCF/d in 2024. The EIA raised their EOS October 2025 gas supply estimate to 3.730 TCF--up 63 BCF versus last month's estimate. By comparison, the Desk this week has an estimate for EOS of 3.866 TCF.

In the LN/NG options on the CME on Tuesday, it looks as if there was rolling of an October/January 3 month calendar spread option position. Open interest in the -$1.25 put fell, while that in the -$1.50 put rose. A trade in those 2 options was executed on the CME. The -$1.25 put was purchased against selling of twice as many of the -$1.50 puts, with the seller of the -$1.50 put collecting 0.5 cents. In the July/October 3 month calendar spread put options, the -10 cent put traded 7.9 cents and the -25 cent put traded 1 cent. These trades look to be closing of positions, based on their open interest declining.

Asian imports of LNG could be boosted as average temperatures for Japan, South Korea and China are all forecast to hold above normal through the end of August. Utilities demand for LNG is seen rising as air conditioning loads will increase. Temperatures across East Asia are already hovering above long-term averages, and are expected to continue trending higher over the next two months. Humidity levels are also seen rising amid their summer rainy season, further boosting air conditioning demand. But, high prices for LNG have kept some Asian buyers on the sidelines in recent months. Also, strong buying by Europe has seen most of the U.S. LNG exports head there in the first half of 2025. So, the boost in demand from Asia may be somewhat limited, although a dip in European buying in their slower summer season may see Asian buyers buying more U.S. LNG. (Reuters)

In NG spot futures, there is currently a double bottom from yesterday/today at 3.515 / 3.510. Support below that is seen at 3.437-3.440. Resistance is seen at yesterday's high at 3.656-3.662. Above that resistance lies at 3.747-3.750.  Momentum is negative basis the DC chart.

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