U.S. natural gas futures fell about 4% on July 27 from a seven-week high in the prior session on record gas output and forecasts for less demand next week than previously expected.

That price decline came despite a decline in flows from Russia to Europe on the Nord Stream gas pipe, forecasts for hotter weather through mid-August than previously expected, record coal prices and the coming expiration of the front-month contract.

The contract was on track to gain about 61% in July, which is just shy of the record monthly percentage gain of 63% in September 2009.

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Extreme heat has already caused U.S. power demand to hit all-time highs several times this summer in many states, including Texas, as homes and businesses crank up their air conditioners.

To keep those air conditioners humming, electric companies have burned more gas than usual due to the retirement of dozens of coal power plants in recent years and because coal prices were at record highs, making it uneconomic for many generators to switch on some of their remaining coal plants.

The spike in gas prices also came despite the ongoing outage at the Freeport LNG export plant in Texas, which has left more gas in the United States for utilities to inject into low stockpiles.

Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 Bcf/d of gas before it shut on June 8. Freeport LNG estimated the facility will return to partial service in October. Some analysts say the outage could last longer.

On its last day as the front-month, gas futures for August delivery were down 34.9 cents, or 3.9%, to $8.644 per MMBtu at 8:56 a.m. EDT (1256 GMT). On July 26, the contract rose to an intraday 14-year high of $9.752 per MMBtu and closed at its highest since June 7.

In the spot market, next-day gas at the Henry Hub in Louisiana rose to $9.46 per mmBtu for July 27, its highest since hitting a record $23.86 during the February freeze of 2021.

So far this year, the front-month was up 133% as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Europe started reducing the amount of gas it imports from Russia since Moscow's invasion of Ukraine on Feb. 24.

Gas was trading around $60 per MMBtu in Europe and at $40 in Asia. That put European prices at their highest since hitting a record near $69 in early March as Russia cut gas flows on the Nord Stream pipeline.

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Russian gas exports on the three main lines into Germany—Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route slid to 3.6 Bcf/d on July 26 from an average of 3.8 Bcf/d since Nord Stream exited a maintenance outage on July 21.

That was up from around 1.4 Bcf/d during the 10 days Nord Stream was shut and compares with an average of 3.7 Bcf/d during the month before Nord Stream shut and an average of 9.4 Bcf/d in July 2021.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states had risen to 96.2 Bcf/d so far in July from 95.3 Bcf/d in June. That compares with a monthly record high of 96.1 Bcf/d in December 2021.