Last week, the U.S. Energy Information Administration (EIA) reported that 55 billion cubic feet (Bcf) of natural gas were added to storage for the week ending June 27. This pushed total inventories to 2,953 Bcf. This build was actually more than what most experts expected, continuing an 11-week trend of larger-than-average additions. 

While these levels are still a bit below the usual five-year average for this time of year, they are significantly higher than last year, showing that there's plenty of gas available. It seems a temporary dip in power plants using natural gas, as they leaned on solar and coal during a recent heatwave, helped contribute to this larger-than-expected storage increase. With overall production remaining strong, this data reminds traders that having a lot of supply remains a challenge in the short term.

At this time, we advise investors to focus on stocks such as Expand Energy (EXE Quick QuoteEXE - Free Report) , Coterra Energy (CTRA Quick QuoteCTRA - Free Report) and Antero Resources (AR Quick QuoteAR - Free Report) .

Demand Heats Up

Despite the storage build, demand for natural gas is really starting to pick up. Total gas use, including exports of LNG, is expected to top 106 Bcf per day this week, indicating a nice jump from the previous week's 103.7 Bcf per day. The sudden surge is due to hot weather. Forecasters are predicting much hotter temperatures for mid-July, leading to a rapid increase in demand for cooling. Meanwhile, LNG exports are slowly recovering after some maintenance, with gas flowing to major terminals at an average of 15.4 Bcf per day in early July. Some minor roadblocks still exist due to softer global prices and planned slowdowns for exports. But overall, the demand picture continues to brighten, thanks to strong domestic electricity use and LNG capacity gradually getting back to normal.

Price Action: A Tug-of-War

Natural gas prices have been quite jumpy, reacting to changing weather predictions and the latest storage numbers. U.S. natural gas futures for August delivery dropped sharply after the EIA's storage report. It closed down 2.26% at $3.44 per million British thermal units (MMBtu), as the bigger-than-expected increase in natural gas storage fueled worries about too much supply. However, this dip came after prices had actually risen earlier in the week, driven by predictions of hotter weather and renewed optimism about exports. Spot prices had even hit a three-year high for June recently, averaging $3.02/MMBtu. Traders are eagerly watching for a sustained period of hot weather to push demand higher and create a more favorable setup for prices to rise.

Conclusion: A Stronger Price Environment Ahead?

Looking ahead, the overall situation for natural gas remains positive, especially as seasonal demand intensifies. Even though storage levels are now 6.2% above the five-year average, they are still almost 6% below last year's levels. This leaves room for the supply to tighten if cooling demand stays strong. With LNG exports increasing and power plants burning more gas due to record electricity needs, the current supply cushion could shrink faster than expected. If upcoming storage reports show smaller-than-usual additions, market sentiment could shift very quickly. For investors, this creates an interesting opportunity in the second half of the year. For now, though, the commodity appears to be in a summer tug-of-war. Investors might consider names with solid fundamentals and the agility to weather short-term uncertainty.

3 Stocks to Focus on

Expand Energy: Expand Energy has solidified itself as the largest natural gas producer in the United States, following the Chesapeake-Southwestern merger. With key assets in the Haynesville and Marcellus basins, Zacks Rank #3 (Hold) EXE is well-positioned to capitalize on the increasing demand for natural gas, driven by LNG exports, AI/data centers, EV expansion, and broader electrification trends.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Expand Energy’s 2025 earnings per share indicates a 461.7% year-over-year surge. Over the past 60 days, the Zacks Consensus Estimate for this firm’s 2025 earnings has moved up around 4%.

Coterra Energy: It is an independent upstream operator primarily engaged in the exploration, development and production of natural gas. Headquartered in Houston, TX, the firm owns some 183,000 net acres in the gas-producing Marcellus Shale of the Appalachian Basin. The company’s share of natural gas in its overall production is around 65%.

Coterra’s expected earnings per share growth rate for three to five years is currently 29.1%, which compares favorably with the industry's growth rate of 20.5%. Valued at over $19 billion, Coterra Energy - carrying a Zacks Rank of 3 - has a trailing four-quarter earnings surprise of roughly 1.5%, on average.

Antero Resources: It is one of the leading natural gas producers in the United States. Antero Resources has more than two decades of premium low-cost drilling inventory in the prolific Appalachian Basin, indicating a strong production outlook. AR churned out 306 billion cubic feet equivalent in the most recent quarter, of which more than 60% was natural gas.

The Zacks Consensus Estimate for Antero Resources’ 2025 earnings per share indicates 1,457.1% year-over-year growth. Moving to top line, the Zacks Consensus Estimate for this #3 Ranked firm’s 2025 revenues represents 28% growth over the previous year.