After last summer’s record-breaking heat, the U.S. is experiencing a noticeably milder start to the season in 2025. These more moderate temperatures have eased pressure on the power grid, leading to a slight dip in natural gas demand for electricity generation. While overall consumption remains steady, shifting weather patterns and evolving global events continue to influence energy markets at home and abroad.

Domestic Demand

Total natural gas demand for the week ending July 9th was slightly lower than during the same period last year, with a total decrease of just under 1 percent. U.S consumption decreased by 5.4 percent, with power generation experiencing the most significant decline, showing a reduction of 11.3 percent. The industrial sector saw a decrease of 0.5 percent, while the residential and commercial sectors recorded a 17 percent increase. Although this reflects a drop in demand compared to last year, there was an increase in demand from the previous week, primarily due to rising temperatures.

International Demand  

The ongoing geopolitical conditions in the Middle East have raised concerns about the global natural gas markets, especially considering recent events in Iran. Iran controls the Strait of Hormuz, which is a crucial waterway through which one-third of the world's seaborne oil and one-fifth of global liquefied natural gas (LNG) shipments travel. If this strait were to be blocked, it could lead to a significant increase in prices. Recently, the Iranian Parliament voted to close the strait, but this decision still requires approval from Iran’s Supreme National Security Council before it can be enacted.

Last month, U.S. LNG exports reached their second-lowest monthly level since the beginning of this year. This decrease in production was primarily due to maintenance at Cheniere's Sabine Pass facility in Louisiana, which has a capacity of 4.5 billion cubic feet per day (bcf/d), as well as unplanned outages at Freeport LNG's plant in Texas, which has a capacity of 2.1 bcf/d. This marks the second consecutive month of decline for the U.S. following a record-setting month in May. Despite this decline, the U.S. continues to be the leading exporter of LNG.

Production & Supply

Natural gas storage is currently at 3,006 billion cubic feet (Bcf) as of July 4th. This reflects a 5.8 percent decrease from last year but is 6.1 percent higher than the five-year average. This marks the third consecutive month in 2025 that U.S. natural gas storage has exceeded the five-year average. The natural gas rig count is up 6.9 percent compared to last year. Producers stabilized prices by reducing drilling operations last year, which contributes to the year-over-year increase.

There was a slight decline in marketed production in the U.S. compared to last week. However, when compared to the same period last year, there is a 3 percent increase. Dry production also experienced a slight decrease from the previous week, yet it too shows a 3 percent rise compared to the same time last year.

The hurricane season is upon us which can have significant impact on the natural gas market. Hurricanes pose a risk to natural gas infrastructure, potentially causing supply disruptions that can lead to increased demand and higher prices. Recently Colorado State University’s team forecasts eight named hurricanes for the 2025 season. CSU’s team cites uncertainty around their forecast due to the El Niño-Southern Oscillation (ENSO) cycle, where both El Niño, characterized by warmer-than-normal ocean temperatures, and La Niña, characterized by cooler-than-normal ocean temperatures, are present.

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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.

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