Gas Prices Rise as Storage Tightens and Heat Spikes

Natural gas values surged to a two‑and‑a‑half‑month peak, closing higher on Thursday after the U.S. Energy Information Administration (EIA) reported a smaller‑than‑expected rise in storage levels.

Inventories grew by 92 billion cubic feet (bcf) for the week ending May 22, short of analysts’ 96 bcf forecast.
New weather models predict hotter temperatures across the West and Midwest through early June, potentially driving electricity firms to use more gas for cooling.

Rising Production Outlook

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.
The Strait of Hormuz remains closed, cutting Middle Eastern supplies and giving U.S. exporters a chance to fill the gap.

Domestic Supply & Demand

BNEF data shows dry‑gas output in the lower 48 states rose 2.6 % YoY to 110.4 bcf/day, while domestic demand climbed 2.1 % to 70.2 bcf/day.
LNG imports added 18.5 bcf/day, a 2.2 % WoW increase.

Global Supply Constraints

Qatar’s Ras Laffan plant, supplying ~20 % of worldwide LNG, lost 17 % capacity after an Iranian attack; repairs could take 3–5 years.
The Strait of Hormuz closure also limits gas shipments to Europe and Asia.

Energy Demand Signals

Edison Electric Institute data shows a 5.2 % YoY rise in U.S. electricity output for the week ending May 23, indicating higher overall demand that could support gas prices.
EIA’s latest report confirms storage levels are 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.

Drilling Activity

Baker Hughes reports 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.

Bottom Line

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.