August Nymex natural gas broke below $3 and settled at $2.94, a third straight losing session, after cooler U.S. weather forecasts and a bearish storage report pulled the demand bid out of the market. Production running above last year and inventories well over the five-year average leave the near-term trend firmly with the sellers.
Cooler weather forecasts and a soft inventory print sent August Nymex natural gas to a $2.94 settlement, down 7.2 cents or 2.39% and the lowest close for a nearby futures contract in about six weeks. It was the third straight day of selling, and analyst James Hyerczyk argues the bulls have no argument right now.
The contract broke through its April 30 bottom at $2.974 during the session, falling to $2.874 before rebounding into the close at $2.940. On a full-contract chart the next support sits at $2.857, and a failure there points toward $2.801. Those following how to trade natural gas are watching whether buyers step in near that level.
The storage build gave sellers cover
The Energy Information Administration reported working gas in storage rose 61 billion cubic feet for the week ending July 3, matching expectations. Total inventories stand at 2,983 billion cubic feet.
That figure is 15 billion cubic feet below the same period last year but 185 billion cubic feet, or 6.6%, above the five-year seasonal average. The storage numbers keep signalling no tightness, and cooler models for the coming weeks removed the demand that had been holding a floor under prices.
Production keeps climbing
Supply is the reason Hyerczyk cannot turn bullish. Lower-48 dry gas production averaged 112.6 billion cubic feet per day on Friday, up 5.2% from a year ago according to BloombergNEF, while lower-48 demand averaged 77.7 billion cubic feet per day, barely above year-ago levels.
The EIA raised its 2026 U.S. dry gas production forecast to 111.2 billion cubic feet per day earlier this week, slightly above its previous estimate. Baker Hughes reported the active natural gas rig count held steady at 126 for the week, below the February high of 134 but still near record-output territory.
LNG damage and El Niño frame the longer view
The one structural support is damage to Qatar’s Ras Laffan Industrial City. Qatar said attacks earlier this year knocked out roughly 17% of the facility’s LNG export capacity, with repairs expected to take several years. LNG flows to U.S. export terminals averaged 18.2 billion cubic feet per day on Friday, down 5.2% from the previous week.
The Edison Electric Institute reported U.S. electricity output rose 7.73% year-over-year for the week ending July 4, though that growth is not fast enough to absorb the supply that keeps building. Against that, NOAA expects El Niño conditions to strengthen, with a 63% chance of a very strong event between November and January that would soften winter heating demand before the season arrives.
Source: FXEmpire
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