Natural Gas News: Forecast Signals Downside Risk Below $2.762 Support Line

Natural Gas Hovers Near Key Support as Cooler Weather and Strong Supply Weigh on Prices

U.S. natural gas futures are trading sideways after a three-session losing streak, holding just above critical long-term support at $2.762. The September Nymex contract tested Tuesday’s low of $2.725 early Wednesday but failed to recover meaningfully, signaling ongoing bearish pressure driven by cooling weather forecasts and robust production levels.

At 14:06 GMT, Natural Gas Futures are trading $2.760, down $0.006 or -0.22%.

Will Rising Production and Cooling Weather Cap Gains?

Forecast models turned sharply cooler across the eastern U.S. and parts of the Southwest for August 24–29, according to Atmospheric G2. This shift is expected to curb late-summer power demand for air conditioning, applying further downward pressure on prices. The updated outlook undermines expectations for weather-driven demand, despite persistent heat in parts of the South and West.

On the supply side, U.S. dry gas production hit 108.4 Bcf/day on Tuesday, up 5.7% year-over-year, according to BloombergNEF. Production is running near record highs, as confirmed by recent EIA projections. The agency raised its 2025 production forecast to 106.44 Bcf/day, up 0.5% from last month, and its 2026 estimate to 106.09 Bcf/day, up 0.7%.

Are LNG Exports and Demand Holding Up?

Lower-48 gas demand remains solid at 79.8 Bcf/day, up 2.7% year-over-year, offering a partial offset to the supply surge. However, LNG net flows to export terminals slipped to 14.8 Bcf/day, down 6.1% week-over-week. This drop raises concerns about U.S. export capacity utilization, especially as global markets—particularly Europe—remain well-supplied. European gas storage stood at 74% full as of August 16, below the 5-year average of 81%.

Does Storage Data Suggest More Downside Risk?

Last week’s EIA inventory report added to the bearish tone. Storage rose by 56 Bcf, above the 5-year average of 33 Bcf and slightly ahead of consensus expectations. Inventories remain 6.6% above the 5-year seasonal norm, despite being 2.4% below last year’s levels. This margin suggests the market is comfortably supplied heading into the fall.

Electricity output also showed weakness, with the Edison Electric Institute reporting a 1.9% year-over-year decline for the week ending August 9. While cooling demand has seasonally faded in the Midwest and Northeast, the anticipated heat in the Southwest and Texas may not be enough to tighten balances meaningfully.

Market Forecast: Bearish Bias Holds Below Resistance

With futures trading below near-term resistance at $2.966 and technical momentum still weak, the market remains exposed to further downside. A sustained breakdown below $2.762 opens the door to $2.574. Bulls would need a close above $2.966 to trigger short-covering toward $3.148 and the 50-day moving average at $3.400. Until then, the weight of strong supply and cooling demand points to a bearish near-term outlook.

More Information in our Economic Calendar.