Natural Gas News: Futures Slip Today as LNG Weakness Counters Warm Weather Forecast

Natural Gas Futures Dip as LNG Weakness Offsets Warmer Weather Outlook

U.S. natural gas futures were trading lower at mid-session Wednesday, under pressure from weak LNG feedgas demand and record-high production, despite warmer weather models that could increase late-season cooling demand. October futures pulled away from key technical levels near $3.200 and $3.238, moving toward a critical support zone between $2.947 and $2.887.

The session’s slide highlights the market’s struggle to maintain bullish momentum, with mixed fundamentals keeping traders cautious.

Is LNG Feedgas Dragging on Bullish Weather Trends?

LNG feedgas deliveries dropped to a three-week low of 14.6 Bcf/day, down 5.5% week-over-week, weakening one of the primary demand pillars for U.S. gas exports. This softness is offsetting otherwise supportive weather models. Atmospheric G2 projected significantly warmer conditions for two major periods—September 14–18 and September 19–23—across the East, Midwest, and West Coast. These shifts typically increase cooling demand, especially from power generators.

However, domestic gas demand remains soft. Lower-48 consumption was reported at 70.4 Bcf/day on Tuesday, down 1% year-over-year, according to BNEF. This underscores the challenge warm forecasts face in offsetting broader demand softness and export uncertainty.

Production Holds Near Record Highs as Rig Count Slips

Production remains a major headwind for bulls. U.S. dry gas output is averaging 107.0 Bcf/day, up 4.6% from a year ago and near all-time highs. The EIA’s latest update raised its 2025 production outlook by 0.2% to 106.63 Bcf/day, reinforcing long-term supply strength.

Despite a slight decline in drilling activity—active gas rigs slipped by 1 to 118 last week—production levels remain resilient. This suggests that even modest pullbacks in rig count aren’t yet translating into supply constraint, a critical factor for traders tracking the fundamental balance.

Inventory and Electricity Demand Paint a Mixed Picture

The latest EIA storage report was neutral, with a 55 Bcf build matching consensus expectations but outpacing the five-year average of 36 Bcf. Inventories sit 5.6% above seasonal norms, reducing the urgency of weather-driven demand. Thursday’s report is expected to show a 69 Bcf increase.

Additionally, electricity generation data added to the bearish tilt. The Edison Electric Institute reported a sharp 7.82% year-over-year drop in U.S. power output for the week ended August 30. While the 52-week average still shows growth, the near-term dip points to reduced cooling demand through early September.

Bearish Setup as Futures Test Key Technical Support

With futures now approaching the short-term support zone at $2.947 to $2.887, technical traders are watching for a potential higher low that could signal renewed buying. A failure at $2.887 would likely trigger a sharper sell-off toward $2.695–$2.647. Conversely, a move back above $3.238 would be bullish, opening the door to $3.579.

For now, fundamentals favor a bearish short-term outlook, as elevated production, weak LNG demand, and only modest weather-related support keep pressure on prices. Traders should monitor the $2.947 to $2.887 zone closely for signs of either stabilization or breakdown.

More Information in our Economic Calendar.