U.S. Natural Gas Prices Drop as Storage Surges Past Forecasts: EIA Reports 122 Bcf Build

U.S. natural gas futures experienced a notable decline of over 2%, settling at $3.62 per MMBtu, following the release of the Energy Information Administration’s Natural Gas Storage Report for the week ending May 30, 2025. The report revealed a storage build of 122 Bcf, surpassing analysts’ expectations of 111 Bcf. This marks the seventh consecutive week of above-average injections, contributing to a total inventory of 2.598 trillion cubic feet, which is 4.7% above the five-year average.

The unexpected increase in storage levels has prompted market participants to reassess supply and demand dynamics. While the surplus in storage provides a buffer against potential supply disruptions, it also indicates a potential slowdown in consumption or an oversupply of natural gas. This shift in market sentiment has led to a bearish outlook, influencing the downward movement in futures prices.

Concurrently, U.S. natural gas production has experienced a slight decline. Average daily production in the Lower 48 states decreased to 104.0 Bcf in June, down from 105.2 Bcf in May and a record high of 106.3 Bcf in March. This reduction in output, combined with a dip in LNG exports—averaging 13.8 Bcf per day in June compared to 15.0 Bcf per day in May—suggests a softening in demand. Factors such as seasonal maintenance at major LNG export terminals, including Cheniere’s facilities, have contributed to this decrease.

Despite these developments, weather forecasts indicate warmer-than-usual conditions through mid-June, which could lead to increased demand for natural gas for cooling purposes. However, the current oversupply situation may temper the impact of higher consumption on prices.

In summary, the latest EIA storage report has introduced a bearish sentiment in the natural gas market. While warmer weather may boost short-term demand, the combination of increased storage levels, reduced production, and lower LNG exports suggests a more balanced supply-demand equation, potentially leading to continued pressure on natural gas prices in the near term.