Natural Gas Update August 13,2025

Natural Gas--NG is up 1.6 cents
NG futures are higher now after falling overnight as ample supplies of the fuel in storage and forecasts of cooler weather and lower demand than previously expected through late August weighed on prices. This morning's uptick may be some bargain hunting and short covering after the sharp fall in prices the past few sessions. Additionally yesterday the futures to cash differential fell to minus 15 cents from the minus 5 cents seen Monday. This may be too great a differential at present.

LSEG said average gas output in the Lower 48 states has risen to 108.3 BCF/d so far in August, up from July’s record monthly high of 107.9 BCF/d. Back on August 5th, LSEG said August's output was averaging 108.0 BCF/d.

On Tuesday, LSEG projected average gas demand in the Lower 48 states, including exports, would ease to 109.6 BCF/d next week from 110.0 BCF/d this week. These forecasts are down 0.7 BCF/d from those seen Friday.

One bright spot in the NG narrative is the strong LNG feed gas demand. August's average LNG volume has risen to 16.2 BCF/d from July's average of 15.5 BCF/d. August's average is a new record, beating April's record volume of 16.0 BCF/d.

Forecasts for August are on track to be the coolest since 2017, with cooling demand falling 4 BCF/d over the next seven to 10 days, according to EBW analysis.

In the STEO report issued Tuesday, the EIA sees the Q4 natural gas price rising to $3.90 ( from July's price of $3.20) and in 2026 the natural gas price is seen at $4.30.  The price is seen going up as production is seen relatively flat while LNG exports are seen increasing. The EIA's price forecasts were lowered by 6 cents for 2025 to $3.61 and by 7 cents for 2026 to $4.34.   NG production in the US is seen in 2025 at 106.4 BCF/d, which is up 0.5 BCF/d from July's estimate and for 2026 production is seen at 106.1 BCF/d, which is 0.7 BCF/d more than they predicted in July. Yet, the EIA lowered their EOS storage estimate to 3.872 TCF. This is down 38 BCF from the last month's estimate. That EOS puts them below many other estimates we have seen, which are over 3.9 TCF.

Notable options trades were seen in the October calls and puts  and the October/January spread. In the October options, the $3.50/$3.75 call spread was bought at a cost of 3.1 cents. Together with that the $2.75/$2.50 put spread was bought at a cost of 8.15 cents with delta October futures purchased at $2.93. In the October/January calendar spread options, the -$0.80 call was bought against which the -$2.00 put was sold at a cost of 0.3 cents. The October January futures spread settled at $1.337. A small amount of the October/January -$1.30 straddles traded at a cost of 27 cents. We have a few colleagues who believe that the spread still has room to widen favor of January, with one colleague suggesting that the large open interest in the -$1.50 put "will act as a magnet". There are nearly 23,000 contracts open in the October/January -$1.50 put strike.  

Natural gas futures open interest on the CME rose by over 23,000 contracts in Tuesday's trading, even as September 2025 open interest fell by over 16,000 contracts. We see possible new shorts having been added in October, November and January. 

Today's spot NG futures are at their lowest since November 15. Support at 2.769-2.772 has been tested with a current low seen today of 2.764. Below this support is seen at 2.688. Resistance lies at 2.881-2.887. Momentum has turned negative with the steep drop in prices seen the past few sessions. One supportive element technically if prices fall could be the weekly continuation chart's lower bollinger band, which intersects near 2.74. 

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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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