The injection season is progressing with storage builds below the historical average. Cumulative injections since April 1 total 1,050 Bcf, compared to the five-year average of 1,125 Bcf. The slower injection pace is consistent with stronger-than-normal summer demand from the power sector.
Power sector gas demand averaged 42.5 Bcf/d in June, up 5.1% year-over-year, as coal-to-gas switching continues. With coal prices remaining elevated relative to gas on a BTU-equivalent basis, gas-fired generation is capturing incremental market share. The EIA expects gas-fired power generation to rise 4.8% in 2026.
Production is steady but not growing. Dry gas output has plateaued at 103-104 Bcf/d, with the rig count flat to slightly declining. The Baker Hughes natural gas rig count stood at 122 as of June 19, down from 130 a year ago. Producers are maintaining discipline despite stable prices.
The trajectory for storage at the end of injection season (October 31) is projected at 3,800-3,900 Bcf, within the historical range but below the 4,000+ Bcf levels seen in 2023 and 2024. A tighter storage position heading into winter would support higher prices in Q4.
The slower-than-normal injection pace suggests the storage surplus will narrow further as summer progresses. Buyers should monitor weekly EIA storage releases — injections consistently below 85 Bcf in July would signal a tightening market. Forward winter coverage should be locked in before August, when the winter premium typically expands.