The US natural gas market is not sending one clean message. Storage is still comfortable. Henry Hub prices remain weak. Production is holding near record levels. But beneath that soft price picture, pressure is building in the upstream sector.

The next EIA storage report may show why the market is hard to read. NGI expects a 73 Bcf injection for the week ended April 24. If that forecast is confirmed, the year-on-year storage surplus would fall to 110 Bcf, down from 142 Bcf. That would point to some tightening versus last year. But it would not make the market tight.

Against the five-year average, the surplus would rise to 147 Bcf. That is the more important signal for prices. The market still has enough gas. It does not need to pay aggressively for supply.

The latest official EIA report also supports that view. Working gas in storage stood at 2,063 Bcf as of April 17, after a 103 Bcf injection. Stocks were 142 Bcf above last year and 137 Bcf above the five-year average.

Weather helped, but not enough

Late-season cold gave demand a short lift.

Wood Mackenzie data cited by NGI showed Lower 48 residential and commercial gas consumption averaging 18.9 Bcf/d last week, up 2.9 Bcf/d from the previous week. Heating degree days rose 50% to 60 HDDs.

That helped offset weaker demand from industry and power generation, where combined consumption fell by 1.5 Bcf/d.

But the price reaction was poor. NGI’s Weekly Henry Hub index fell another 7 cents to average $2.700/MMBtu.

That is the market’s real message. Weather can still move demand. It cannot fully change the pricing structure when inventories remain high.

Production is steady, but activity is still cautious

Lower 48 dry natural gas production averaged around 110 Bcf/d for a fourth straight week, according to Wood Mackenzie data cited by NGI. Supply is not falling enough to shift the market.

Field activity is not surging either.

Baker Hughes data showed the US rig count rising by just one rig to 544 for the week ended April 24. Oil rigs fell by three to 407, while gas rigs rose by four to 129. The total count remains below last year’s level of 587 rigs.

This is not a broad drilling recovery yet. Operators are still cautious. The market has not moved from discipline to expansion.

Oil risk is changing the calculation

The bigger issue is no longer only gas storage.

Iran-related war risk has lifted the importance of crude prices in the US drilling outlook. If oil stays structurally higher, US producers may add activity in oil-focused basins such as the Permian.

That would matter for gas.

More oil drilling often means more associated gas. For Henry Hub, that is not automatically bullish. It can add supply to a market that already has a cushion.

Halliburton’s first-quarter results show the tension. The company reported $5.4 billion in revenue and said North America is in the “early innings of a recovery,” even though North America revenue fell 4% year over year.

Patterson-UTI gave a similar message. CEO Andy Hendricks said momentum appears to be shifting back toward US land activity over the coming quarters, while also stressing capital discipline.

Falling DUCs reduce flexibility

There is another pressure point: drilled but uncompleted wells.

NGI, citing EIA data, reported that Permian DUCs fell to 793 at the end of March. That was the first time the region dropped below 800 since May 2014. Haynesville DUCs also fell below 600 in February and March, the first such drop since December 2022.

DUCs matter because they give producers room to respond without immediately drilling new wells. When that inventory falls, companies have less spare flexibility. Maintaining output becomes harder without new drilling and completion work.

That could pull activity higher even if gas prices remain weak.

The market is balanced, not comfortable

The US gas market is not tight. Storage remains above normal. Production is steady. Henry Hub is still weak.

But the next phase is not simple.

If oil-driven drilling returns before gas demand strengthens, the market could face more associated gas supply. That would keep pressure on Henry Hub even as oilfield service activity improves.

For now, the signal is mixed. Weather helped demand, but prices stayed soft. Storage is tighter than last year, but still high against the five-year average. Production is stable, but DUC inventories are falling.

The key question is whether oil-led drilling comes back before the gas market can absorb the next wave of supply.