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Natural Gas News: Key Support Breaks—Futures Sink to 9.5-Month Low on Bearish Analysis

By:
James Hyerczyk
Updated: Aug 24, 2025, 02:28 GMT+00:00

Key Points:

  • Natural gas futures dropped below $2.748, hitting a 9.5-month low, with $2.574 now acting as the next support level.
  • Cooler U.S. weather forecasts from late August to early September threaten to weaken gas-fired power demand.
  • U.S. dry gas output reached 108.4 bcf/day, up 6.3% YoY, as production growth keeps pressure on prices.
Natural Gas News

Natural Gas Slumps Below Key Support as Cooler Weather, Production Growth Pressure Prices

U.S. natural gas futures ended Friday under pressure, settling below long-term support at $2.748 and putting the next key support at $2.574 in play. September contracts hit a 9.5-month low, reflecting a combination of bearish fundamentals—cooling weather forecasts, rising production, and solid inventory levels—all weighing heavily on the market.

On Friday, Natural Gas Futures settled at $2.698, down $0.128 or -4.53%.

Will Cooler U.S. Weather Keep Capping Nat-Gas Demand?

Forecasts from Atmospheric G2 shifted cooler for late August and early September across key demand regions including the East, South, and Midwest. This is expected to reduce demand for gas-fired power generation as air conditioning loads ease, a direct hit to late-summer gas consumption. With Lower-48 demand on Friday at 77.9 bcf/day—up 9.8% year-on-year—the forecasted dip in temperatures could stall that momentum.

Is Surging U.S. Production Fueling the Downside?

Production remains a headwind. The EIA revised its 2025 U.S. natural gas production forecast up by 0.5% to 106.44 bcf/day, while 2026 estimates rose to 106.09 bcf/day, reflecting continued supply-side strength. BloombergNEF reported Friday’s Lower-48 dry gas output at 108.4 bcf/day, up 6.3% from the prior year. U.S. gas rigs remain elevated at 122, near a two-year high. Simply put, supply is holding firm even as demand shows signs of easing.

Inventories Offer a Mixed Signal—But Lean Bearish

The EIA reported a smaller-than-expected inventory build of +13 bcf for the week ended August 15, well under the +18 bcf consensus and significantly below the 5-year average of +35 bcf. However, storage remains +5.8% above the 5-year average, suggesting the market remains well supplied. European gas storage at 74% capacity—below the 82% five-year average—is worth monitoring, but has yet to provide any significant bullish pull.

Will Short-Covering Trigger a Bounce or More Selling?

Daily Natural Gas

While technical support is under threat, traders should watch $2.849. A break above this level could shift minor momentum higher, potentially sparking short-covering toward $2.966 or even $3.148. However, any bounce is likely to face resistance as sellers re-enter. These moves are typically unsustainable unless backed by a material shift in fundamentals.

Market Forecast: Bearish Bias Holds Below $2.748

With prices now below a key support level and fundamentals staying heavy—cooler weather, record production, and adequate storage—the short-term outlook remains bearish. Unless $2.849 is reclaimed with volume, expect tests of $2.574, and sellers to fade rallies. Any upside is likely to be short-lived and driven more by technical factors than lasting demand recovery.

More Information in our Economic Calendar.

About the Author

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.

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