As the final full month of summer began, the U.S. saw cooler-than-normal temperatures, easing short-term demand and putting downward pressure on natural gas prices. However, the National Oceanic and Atmospheric Administration (NOAA) is forecasting above-average temperatures later this month in its 8–14-day outlook.

Weather continues to be a major driver in the natural gas market. On August 7, NOAA released an updated 2025 Atlantic Hurricane Season forecast, calling for fewer named storms than projected in May. Additionally, the Farmer’s Almanac released its projections for the upcoming winter with colder-than-normal temperatures and above-average precipitation for much of the U.S.

Domestic Demand

Cooler conditions have contributed to a decline in natural gas demand nationwide. Total U.S. consumption dropped 14.4 percent from last year, while overall demand fell 8.3 percent. The power sector saw the largest year-over-year decrease at 23 percent, followed by a modest 0.4 percent drop in the industrial sector. The only sector to see growth was residential and commercial use, which rose 4.5 percent.

Looking forward, the rapid growth of artificial intelligence is expected to drive higher electricity demand—much of it powered by natural gas—as new data centers are built across the country. One proposed facility in Cheyenne, Wyoming, is projected to consume five times more electricity annually than all Wyoming households combined.

International Demand

U.S. liquefied natural gas (LNG) exports were 24 percent higher last week than during the same period last year. Additional LNG export capacity is expected in the coming months, with major new projects and expansions underway along the Texas and Louisiana Gulf Coast.

While supply is set to expand, there are some signs of softening demand. China—the world’s second-largest LNG importer—cut imports by 12 percent due to slower-than-expected consumption growth, greater domestic production, and increased pipeline imports from Russia.

Europe, meanwhile, recorded a 5 percent increase in LNG imports during the first half of the year and is on track to reach 80–90 percent storage capacity by fall.

Production & Supply

At the start of the year, U.S. natural gas storage levels were below the five-year average. Today, they are 5.9 percent above that benchmark. The number of active natural gas rigs has also climbed 26.5 percent compared to last year, totaling 124 rigs—a sign that producers are ramping up activity ahead of the heating season and taking advantage of slightly higher prices.

Total natural gas supply has increased by 1 percent year-over-year to 111.9 billion cubic feet (Bcf). Dry production rose 2.7 percent, while marketed production climbed 2.9 percent.

Now two months into the 2025 hurricane season, NOAA’s revised forecast calls for 13–18 named storms—a reduction from earlier projections but still with a 50 percent likelihood of above-normal activity. Hurricanes in the Gulf of Mexico can significantly disrupt production, making storm season a key factor to monitor in the months ahead.

If you have any questions about the information in this newsletter or would like to talk to someone about your natural gas, please call your sales representative.