The natural gas market is on the verge of a rapid increase in demand as heatwaves continue to sweep through key areas of the U.S. and Europe. Scorching temperatures in these regions will exceed typical seasonal norms, increasing the need for natural gas to power cooling systems and meet rising energy demands. As a result, weather-driven demand will likely keep natural gas prices elevated in the near future. As the heatwave tightens its grip on much of Europe and the U.S., the natural gas sector is gearing up for heightened activity to keep up with the escalating demand for this essential energy source.
Weather Factors' Impact on Gas Supply and Prices
As midsummer approaches in the US, natural gas demand is increasingly dependent on the situation in the Gulf, which definitely exacerbates seasonal patterns — at least making them more challenging to study. Over the past week, global LNG prices have registered significant simultaneous spikes, with Henry Hub prices in the US, in particular, rising by more than 14.5% from their one—month lows. The Strait of Hormuz plays a crucial role in global energy trade, serving as a transit route for approximately one—third of the world’s liquefied natural gas (LNG) and a fifth of all oil. In 2024, Asian countries accounted for 84% of the total LNG and LPG transported through the Strait, and 82% of the LNG. The remaining share came from European countries. A significant portion of China’s LNG imports, namely 24%, is also transported through the Strait of Hormuz.
In my opinion, the geopolitical crisis was the key factor behind the sharp increase in gas prices. Thus, according to a Bloomberg report, Qatar asked gas carriers to wait for further shipping instructions outside the Strait of Hormuz until they were ready to load, amid escalating tensions in the region.
As a result, European natural gas prices are up 4.8% reinforcing the uptrend, while the TTF Rotterdam is up about 16% for the week.
This trend is short—term in nature. Fundamentally lower consumption within the U.S., coupled with increased injection volumes and a cool start to spring and summer, leads to risks of oversupply in the domestic market.
The charts below summarize the statistics:
Current prices vs. price spread 10 days before expiry by month since 2010
Conclusion: The 2025 summer futures are trading above the median level to expiration, but remain within the interquartile range. The 2026 winter contracts are noticeably higher compared to those in 2025, with similar dynamics expected in 2027. This indicates that the market is not expecting a rapid stabilization.
Forward curve compared to 2020—2024
Conclusion: Strong upward skew on the 2025 curve in the 2026 and 2027 contracts. The shape of the curve for the longer contracts after 2027 looks more normalized and resembles the corresponding 2023—2024 curves for the same intraannual period across the price range.
Current gas inventories and next week’s forecast compared to 2019—2024
Conclusion: Inventory fill rates are above the median for the fifth week in a row over the previous 5 years. If current supply and demand conditions persist, a peak level of 2024 is possible. It all depends on the weather in the second half of summer.
Weekly HDD+CDD totals from current NOAA data and forecast for the next two weeks compared to 1994—2024
Conclusion: HDD+CDD values in the first half of June were below the median. Week 26 (June 23—29) is expected to be abnormally hot relative to the last 30 years. Forecast values for week 27 fall within the upper quantile and are consistent with those of 2024.
Weekly cumulative supply/demand difference vs. 2014—2024
Conclusion: The April—June 2025 supply/demand balance data is well below the 10—year median due to low temperatures in the first half of summertime. The last two weeks have seen a trend reversal towards higher balances above the historical median.
U.S. Storage Levels: Cooler Than Expected Temperatures Signal Approaching Cooling Season
According to EIA, as of June 6, 2025, working natural gas volumes in U.S. underground storage reached 2,707 billion cubic feet (Bcf), reflecting a net weekly injection of 109 Bcf. This level is 256 Bcf lower than the same period last year, but 139 Bcf above the five—year average of 2,568 Bcf, placing current inventories in the historical range.
The largest injections occurred in the South Central (+36 Bcf) and East (+33 Bcf) regions, where seasonal cooling demand has not yet fully offset storage accumulation. The overall injection rate remained strong, suggesting that production and supply are still sufficient.
However, as cooling demand intensifies due to projected heat waves, the injection rate may begin to decline in the coming weeks. Nevertheless, storage remains in a comfortable position, providing a buffer against short—term price volatility.
After a warm period in mid-May, temperatures began to drop by the end of June. A busy low pressure system moved through during the past week, bringing cooler than normal temperatures and some pretty strong storms — such as heavy rain and even tornadoes — to the eastern, central, and southern parts of the United States. Meanwhile, the west and northwest saw the opposite situation as a warm, dry ridge of high pressure took over. South Texas has been experiencing extreme heat, with rising temperatures and high heat indexes, making the environment feel even hotter. So far, the total number of cooling degree days (CDDs) in the U.S. has been relatively comparable to what we typically see this time of year; however, this national average hides some significant regional differences.
The western and central U.S., especially the Rocky Mountains, Plains, and Intermountain West, will face extremely high temperatures in late June, with anomalies of +6 to +11 °C, categorizing the region as "hot." On the other hand, the Midwest, Northeast, and Southeast will experience "very warm" conditions with temperature anomalies between 2 and 6 °C higher than we normally expect for this time of year. An intensifying ridge of high pressure drives this heat wave, sharply increasing cooling demands, especially in electricity-reliant areas. Consequently, we can expect to see an increase in the use of natural gas for electricity generation (due to air conditioning), which is likely to put some upward pressure on U.S. gas prices in the short term.
Source: https://charts.ecmwf.int/
Interestingly, cooling degree days (CDD) for major East Coast cities, including New York, Philadelphia, Washington, D.C., and Virginia, as of mid-June 2025 have shown a marked increase in cooling demand, with CDD values soaring to 8 in both New York and Philadelphia. CDD is a valuable metric that helps us estimate the amount of energy needed for air conditioning. As we wrap up June and enter July, we see a noticeable spike, with CDD values reaching their highest point of the year so far. This significant increase in CDD indicates that gas demand in the electric sector is increasing, especially in densely populated and industrial areas.
Notably, actual CDD has been increasing sharply since June 5, exceeding the upper end of the expected range, peaking around June 20. This indicates abnormally hot weather conditions affecting densely populated and industrial regions, far exceeding the climatic norms.
NOAA’s 3-4 week temperature forecast indicates a high probability of higher than normal temperatures across much of the central and western United States. The forecast shows the highest probability (70-80%) of above-normal temperatures in the Four Corners and central Rocky Mountain region, which includes Utah, Colorado, Arizona, New Mexico, and extends into Wyoming, Nebraska, and Kansas. We can also expect warmer weather in the Great Plains, Midwest and Northeast, although the odds there are a bit lower, hovering around 50-65%.
According to the forecast, a broad ridge of high pressure is likely to develop over the western and central U.S. by mid-June, which could lead to increased cooling needs and higher natural gas consumption for power generation in those regions.
Looking ahead to the next week or two, a new high-pressure system that has been developing since June 10 should bring drier weather back to the Great Lakes and Ohio Valley, pushing temperatures to more typical mid-June levels. Overall, national cooling demand is moderate in the short term as weather systems in the Midwest, Ohio Valley, and Northeast balance out the warmer and hotter conditions seen in other regions.
Source: https://www.weather.gov/forecastmaps/
European Storages Affected by Low Pressure Zone over the North Atlantic
Europe is preparing for a significant change in weather as we approach the beginning of June, with a heat wave on the horizon. A stubborn low-pressure system over the North Atlantic has given way to a heat dome that is setting up over the continent. Just last weekend we saw extreme temperatures in Iberia (Spain and Portugal) that have now begun to penetrate France and Western Europe. By mid-June, this heatwave is expected to move further into Northern and Central Europe, with temperatures rising 8-12°C above normal levels in many regions. Forecasters are predicting record-breaking heat, with temperatures exceeding 40 °C in parts of Spain and temperatures exceeding 30 °C in parts of France, Central Europe and the Mediterranean region.
Source: https://www.cpc.ncep.noaa.gov/products/JAWF_Monitoring/Europe/temperature.shtml
As the weekend approaches, temperatures in parts of Central Europe, Italy and the Balkans are expected to rise 10-15 °C above normal seasonal averages. This spike is likely to increase demand for electricity as people become more active in using their air conditioners. Looking beyond the weekend, things become a bit more complicated – while the heat dome may persist into next week, some weather models suggest a shift toward more chaotic weather patterns, bringing rain and storms that could cool temperatures and reduce gas demand in the power sector.
US LNG Production and Exports: Baker Hughes Rig Count Signals Some Cooling Off
U.S. dry gas production remains strong, holding at record levels. Production is now around 105-106 Bcf/d, only slightly below recent highs (a slight dip of about 0.4% in early June, likely due to maintenance or seasonal changes associated with oversupply in injections) Even with this steady production, the industry is cutting back on drilling. The Baker Hughes rig count has been declining for several weeks now, reaching its lowest point since late 2021. This trend is primarily due to changes in fracturing equipment, with more crews switching to electric pumps, which allows for parallel fracturing of two or more wells on the same pad.
According to Baker Hughes, as of June 13, 2025, the total number of oil and gas rigs in the United States stands at 555. This includes 439 oil rigs and 113 gas rigs, reflecting a slight weekly decline of four rigs to 559 from the previous week. Interestingly, oil-focused rigs suffered a significant loss, while gas-focused rigs showed a slight increase to 114 active gas rigs (in part because some Appalachian rigs were reclassified).
This overall decline in the rig count indicates that producers are being cautious after last year’s low prices, suggesting slower production growth going forward. For now, however, U.S. gas supplies are plentiful, with production still several Bcf/d higher than last year and close to all-time highs.
European Gas Supply: Import Reliance and Maintenance Impacts
Across the pond, in Europe, domestic natural gas production remains relatively limited and has not changed much recently. The region is heavily dependent on imports, especially from Norway and via LNG. In the short term, some maintenance work is underway. For example, maintenance at major facilities like the Troll field and the Kollsnes processing plant will peak in mid-June, temporarily cutting Norwegian throughput by about 97.5 million cubic meters per day (roughly 3.4 billion cubic feet per day). This reduction briefly disrupted pipeline flows, such as those through Langeled to the UK in early June.
Still, other sources of supply and necessary withdrawals and injections from storage will offset the apparent impact. Overall, Norway’s supplies to Europe stay robust and will likely recover quickly from maintenance, ensuring a reasonably high market supply level for now. Other domestic production in Europe, such as from the Netherlands or the UK, did not show any major surprises last week – in fact, the UK even increased production slightly during maintenance in Norway.
Gas Storage Levels in Europe: Slowly, but Surely…
European gas storage is growing steadily as countries capitalize on the summer months to replenish their reserves. By early June, EU storage facilities were on average about 50% full, a decent position, although short of last year’s levels at the same time. Europe has enjoyed unusually high storage levels in 2024 due to lower demand and a mild winter. For example, on June 5, EU storage was about 49.5% full, down a few percentage points from the previous year. The replenishment rate for 2025 remains in line with the EU’s target of 90% capacity by November 1.
For now, European storage is gradually increasing on a weekly basis, supported by strong LNG imports and moderate summer utilization at the moment. Barring anything unexpected, Europe appears well prepared to face the coming winter with sufficient gas in storage, which should help mitigate price volatility. However, the ongoing heat wave in the coming weeks could slow the replenishment process if power generation consumes more gas.
Regional Variations in Storage Replenishment
By mid-June 2025, natural gas storage levels are expected to vary significantly across Europe. Recent data show that many countries in Northern and Eastern Europe, such as Sweden, Poland, Romania and Ukraine, are struggling with storage levels below 50%, indicating slower replenishment rates. On the other hand, Southern and Western European countries, such as Spain, France, and Italy, are performing better, with Spain in particular reaching the 71-80% range.
Source: https://agsi.gie.eu/data—visualisation/filling—levels/EU
Europe actively fills its gas storage facilities this summer, with EU-wide levels reaching about 50%, slightly below last year's levels for this period. This puts the region in a decent, but not entirely comfortable, position, especially if the heat wave persists and leads to reduced pumping rates due to increased demand from the energy sector.
Afterword
Ongoing heatwaves in the U.S. and an emerging heatwave in Europe will likely drive a short-term surge in natural gas demand.
The number of cooling degree days (CDD) remains above normal seasonal averages, especially in states across the U.S. with high energy consumption, such as Texas, Florida and Louisiana. In Europe, storage levels are slightly uneven, with some key countries lagging behind and warm weather on the continent is likely to slow injection rates. Although U.S. LNG production and exports are near full capacity, the overall balance sheet is tightening, driving up natural gas prices.
The Dutch natural gas benchmark, TTF, currently trades at €36.21/MWh, equivalent to roughly $11.80–$12.10/MMBtu. This price has rebounded from a low of nearly €34.50 earlier this week, reflecting rising demand due to the intensifying heatwave in Europe and concerns over slower-than-normal injections into storage. With temperatures expected to be well above seasonal averages across much of Europe and demand driven by rising weather, natural gas prices are likely to remain high in the short term.
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