US EIA data showed a natural gas storage build of 101B for the week ending 15 May. The forecast was 96B.
The reported increase was 5B above the forecast. The update points to higher-than-expected injections into storage for that period.
Last Year Comparison
We need to remember what happened this time last year in 2025. The storage report on May 15 showed a 101 billion cubic feet (Bcf) injection, which was higher than the 96 Bcf everyone was expecting. That surprise build immediately put downward pressure on prices for the following weeks.
Now, in late May 2026, we see a similar setup with inventories already high. Current natural gas storage is sitting around 2,650 Bcf, which is more than 25% above the five-year average and significantly higher than this point last year. U.S. dry gas production also continues to be very strong, consistently staying above 103 Bcf per day.
The demand side is not looking strong enough to absorb this supply glut. Weather forecasts for early June are calling for mild temperatures across much of the U.S., which will limit early cooling demand from power plants. While LNG exports are steady, they are not enough to offset the combination of high production and weak domestic consumption.
This environment suggests we should be cautious about holding long positions. Consider strategies that benefit from stable or falling prices, such as selling out-of-the-money call options on the July (NGN26) contract. Buying puts could also be a way to hedge or speculate on further price weakness into June.
Key Risks To Monitor
However, we must watch for any unexpected heat waves forecasted for late June, as that could quickly change the outlook. Any disruption to production, like early hurricane activity in the Gulf of Mexico, would also cause a rapid price spike. Therefore, maintaining tight risk management on any short positions is critical.
