In late June, the world LNG market experienced pivotal changes fueled by increasing demand, resumed U.S. exports resuming, and Japan's strategic actions to secure long-term supply. U.S. gas futures increased as LNG facilities resumed operations, while summer heat drove up power consumption. Tokyo Gas meanwhile accelerated talks with U.S. exporters and broadened upstream investments to secure energy. Weather patterns and geopolitical considerations are likely to dominate LNG prices into the third quarter.
During the latter part of June, the global liquefied natural gas (LNG) market experienced dynamic changes based on evolving weather conditions, export behavior, and tactical moves by major players such as the U.S. and Japan. In the U.S., natural gas markets responded to domestic demand trends as well as the phased resumption of LNG export facilities from spring downtime. While that was happening, Japan escalated its pursuit of long-term LNG sources as energy demands increased and future energy security plans were formulated.
In the latter part of June, U.S. natural gas futures rallied as LNG export volumes started to pick up again. Various large LNG plants restarted operations upon their conclusion of seasonal maintenance, increasing feedgas demand. This came on top of uniformly above-average weather forecast expectations, which spurred more robust gas use for power generation, particularly to serve cooling requirements during entrenched heatwaves.
Although demand was up, production of gas continued below its previous peak levels because of continued pipeline maintenance during early June. The market also saw that stockpile expansion would ease because of higher consumption from power plants, a reversal of the previous trend of robust storage injections. Futures markets indicated optimism of tighter conditions later, with forward contracts for the next few months starting to price in the expectation of reduced storage and improved demand.
In Japan, the latter half of June was characterized by activity around long-term LNG purchases. Tokyo Gas, Japan's largest gas utility, initiated advanced talks with several U.S. LNG sellers. The firm ventured options in several Gulf Coast projects as part of its plans to acquire sure and adjustable energy sources. This was at a moment Japan was planning for an immediate boost in power demand due mainly to industrial growth tied to artificial intelligence infrastructure and chip manufacturing.
Aside from its purchasing activities, Tokyo Gas also remained busy building its presence in upstream American gas production, enhancing its control of its supply chain and reaffirming its long-term commitment to LNG. The country's government has re-emphasized LNG as a pillar of its energy security policy, with buyers looking for supply contracts that extend well into the next several decades.
As July approached, the LNG situation was vulnerable to global supply shifts, weather, and geopolitics. In the United States, market players were keenly focused on feedgas supplies and storage, particularly with summer demand to remain elevated. For Japan, however, there was a likelihood of further enhancing LNG relations with the United States, with emphasis on flexibility and long-term fuel access.
At the international level, geopolitical events—particularly those influencing LNG supplies from places such as Russia and the Middle East—will also be instrumental in dictating LNG price directions into the third quarter. The U.S. and Japan continue to be central influencers within this scenario, with their market trends continuing to influence global LNG trade flows.
