Gas Market: Short-Term Stability vs. Long-Term Tension

NATURALGAS NATURALGAS1! NG1! NATGAS
This analysis was prepared by Dr. Igor Isaev in cooperation with Anastasia Volkova, analyst of LSE.
The natural gas market presents a mixed outlook as we enter Week 28. Last week, Summer 2025 contracts traded slightly above their median pre-expiry levels, staying within historical volatility ranges since 2010. Winter 2026-27 contracts held firmly above the upper bounds of the 10-day pre-expiry band, signaling persistent concerns over supply and weather-related risks. Analysts expect prices to stabilize in the near term, but the forward curve tells a different story. While 2025 contracts with three-year delivery terms have aligned with 2023-2024 prices for similar terms, a significant skew persists in short-term (1-2 years) and long-term (5-6 years) tenors compared to 2020-2024 benchmarks, hinting at underlying structural uncertainty.
Fundamentals show signs of stabilization. For Week 27 (June 28 - July 3), storage injections rebounded to +63 billion cubic feet (BCF), pushing inventories above the five-year median. Injection rates recovered from last week’s dip, and if current supply and demand conditions hold, we could see 2024 peak storage levels. Yet, weather and seasonal factors in the second half of summer pose a limiting challenge. NOAA data indicates a gradual weather stabilization: Week 28 remains hot compared to the past 30 years, but forecasts predict a return to the median by Week 29.
The accompanying graph (Right lower graph) highlights this trend, with candlesticks showing quantiles from 1994 to 2024—red dots for 2024, green for 2025, and blue for 2025 predictions. Regionally, this stabilization pattern holds across nearly all areas.
Despite these gains, the supply-demand balance lags behind historical norms. In Week 28, the net difference between supply and demand remains well below the median for 2014-2024, suggesting that short-term calm masks deeper imbalances. The afterword underscores this tension: while storage growth and weather normalization offer relief, the forward curve’s divergence reflects market unease about systemic risks—be it policy shifts, infrastructure issues, or long-term demand volatility. For now, sentiment stays cautiously neutral, supported by recent injections but shadowed by unresolved signals farther out.