Weather patterns and demand
Weather forecasts continue to play a key role in market movements. NatGasWeather is forecasting moderate national demand through Friday, with stronger demand expected over the weekend due to warmer-than-average temperatures across much of the U.S. However, milder temperatures in the north and east are likely to dampen overall demand.
Production cuts
The natural gas market is grappling with ongoing oversupply issues, prompting major producers such as EQT and Coterra Energy to cut production. These companies are delaying new drilling projects and connecting oil wells to pipelines in response to unusually low prices during summer demand peaks.
Supply and export trends
Natural gas production in the lower 48 states has declined from its July peak of over 103 bcf/d to about 101 bcf/d. UBS analysts attribute the recent price drop to storage constraints, exacerbated by the July production surge. LNG exports temporarily declined due to Hurricane Beryl but have since recovered.
Future prospects
Assuming normal winter conditions, UBS analysts maintain their cautiously optimistic forecast for natural gas prices in 2025. The expected increase in LNG export capacity from terminals such as Plaquemines and Corpus Christi should lead to stronger demand and potentially tighter market balances in the coming years.
Market forecast
The near-term outlook for natural gas futures remains pessimistic as prices struggle to break above key resistance levels. However, the market could experience increased volatility as traders weigh the impact of late summer heat versus the upcoming fall season. The upcoming EIA storage report on Thursday could provide further price direction. In the medium term, export capacity expansion and production adjustments could support a gradual price recovery, but this remains dependent on winter weather conditions and global demand factors.
