Weather patterns and demand fluctuations
The week began with expectations of increased demand due to hot weather across much of the Western, Central and Southern U.S. However, as the week progressed, forecasts changed, predicting milder conditions in key regions such as the Northeast and Midwest. This change in the weather outlook dampened demand expectations, especially as the summer cooling season comes to a close.
Concerns about storage are serious
A key factor in the market’s bearish trend has been growing concerns about natural gas supplies. The Energy Information Administration (EIA) reported stronger-than-expected intakes of 35 billion cubic feet (Bcf) for the week ending August 16, beating market expectations of 26 Bcf. This increase heightened fears of a potential oversupply as the market moves into the off-season.
Production and export trends
Despite recent production cuts by major producers such as EQT and Coterra Energy, the market continues to struggle with oversupply issues. Production from the Southern 48 states fell from its July peak of over 103 bcf/d to about 101 bcf/d. Meanwhile, LNG exports, temporarily impacted by Hurricane Beryl, have recovered, making the supply-demand balance even more complex.
