Texas Heat Keeps Natural Gas Prices Suppressed

Natural gas futures experienced a bounce due to short-covering, but the underlying supply dynamics remain unchanged. The Texas and Plains regions are still experiencing high temperatures in the 90s and 100s, keeping gas-fired power demand alive across the South.

However, the rest of the country is facing normal to below-normal temperatures through August 5, which has killed off the broad power-burn surge bulls needed heading into August. Lower-48 gas demand was estimated at 84.0 Bcf per day on Tuesday, down 2.8% from a year earlier according to BNEF.

Production continues to outpace demand, with production reaching 112.3 Bcf per day, up 1.9% over the same period. The Energy Information Administration raised its 2026 forecast for U.S. dry gas production to 111.2 Bcf per day this month from 111.0 Bcf per day in June.

Baker Hughes reported that active natural gas rigs rose by one to 127 in the week ended July 24, below February's three-year high of 134 but enough to keep output steady.