Natural Gas Update June 5,2025

Overview

Natural Gas --NG is up 6.0 cents
NG prices are now higher, after spending the overnight lower due to the expectation for a larger than average storage injection in today's EIA data.  Weak cash pricing has also likely contributed to prices slipping the past 24 hours. Also, demand forecasts for the coming 2 weeks have been dialed back.

The EIA storage data due out today is seen as a build of 110 to 113 BCF. This compares to last year's build of 94 BCF and the 5 year average build of 98 BCF. This would be the 6th straight week of an injection of more than 100 BCF.

Wednesday's pricing for next day Henry Hub cash gas was between $2.76 and $2.85. This is a very large discount to the front month futures price. This large differential has been cited as giving incentive to storage operators to buy the cash and sell the futures to lock in storage costs. The large differential was also said to have weighed similarly on June futures last month. And one analyst commented :" "A weak Henry Hub physical market, [though], still below $3.00, may act as a short-term brake on warranted medium-term bullish enthusiasm,".

On Wednesday, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 94.8 BCF/d this week to 97.1 BCF/ next week. These forecasts were down a total of 5.4 BCF/d from those seen Monday.

Lower 48 natural gas demand edged up today to the highest since April 16 at 70.31 BCF/d to remain above the previous five-year average around 65.4 BCF/d, Bloomberg data shows.

U.S. domestic natural gas production is estimated today at 105.0 BCF/d today, having recovered from a low of 104.3 BCF/d on June 3. Production averaged 106.38 BCF/d over the previous 30 days, according to Bloomberg data.

Settlements on Wednesday showed July 2025 through October 2025 were lower on the day, compared to Calendar year 2026 settling higher by 1.7 cents for January to as much as +4.3 cents for December 2026. We read into this a few things: 1) the front is weak as cash remains well below the futures  (2) large storage injections have seen the curve staying wide; the October January spread is trading within 2 cents of its lowest recent price of $1.189. (3) the back end of the curve is telling us that it sees demand rising and or production leveling off. 

Also notable from CME trading in NG futures from Wednesday is the large open interest increase seen. Open interest rose by a total of 20,722 contracts with increases in August through May ( except for December). We see this as more new length versus short positions given prices rose during the session from 9 am to the closing bell at 2:30 pm.

The strength exhibited by the Calendar 2026 versus nearer contracts settlements is reflected in analysis by BofA. The likelihood of average Henry Hub prices rising above $4/MMBtu this year is decreasing, according to BofA. However, the upside in 2026 is growing as LNG feed gas demand continues to surge, they say. Flagging gas-to-power demand and hefty storage rates could keep 2025 prices to around $3.75, but could lift exponentially by the following summer. The bank increased its guidance for average prices in 2026 to $4.75.

Technically NG still has positive momentum basis the DC chart. We see a possible bull pennant formation on the DC chart, suggesting that the upward price pattern is currently paused. Support for the spot futures is seen at 3.608-3.613 and then at 3.527-3.531.  Resistance at 3.764 is being tested. Next resistance lies at 3.840. The 100 day moving average for the spot futures basis the DC chart intersects at 3.698. 

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