Forex▼ Bearish
Natural Gas Falls as Cooler Forecasts Meet Record Supply
Natural gas futures gapped lower Monday as cooler forecasts removed demand support. Record production and LNG maintenance keep supply ample. Storage surplus grows.
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Nymex natural gas futures gapped lower Monday, dropping 2.38% to settle at $2.668 per million British thermal units. The move followed weekend weather models that pulled heat out of the Midwest and Northeast, removing the demand catalyst that had supported prices last week.
September futures gapped through the short-term retracement zone at $2.723 to $2.698 on the open, hitting an intraday low of $2.638 before recovering slightly. The retracement zone now acts as resistance. The main trend remains down; the 50-day moving average at $2.961 sits well above current prices.
The supply picture is the dominant force. Lower-48 production averaged 111.3 Bcf per day in August, near multi-month highs. Shale wells keep producing, and associated gas from Permian oil drilling continues to add volume regardless of gas prices. Freeport LNG's maintenance, which started in July and is expected to run through late August, has taken roughly 2 Bcf per day of export capacity offline. Feedgas deliveries to the nine major U.S. LNG plants averaged 17.1 Bcf per day so far this month, below July levels. Gas that would normally flow to export terminals is staying domestic, deepening an already oversupplied market.