Natural Gas Update August 22,2025

Overview

Natural Gas--NG is down 6.9 cents
NG futures are lower today, though they are having an inside trading day versus yesterday's price range. Weather demand will ease in the coming days to below normal, thus weighing on prices. Thursday's rally in NG prices was due to a better than expected EIA storage number and due to the recent bounce back in feed gas volumes at LNG export plants.

The EIA storage data seen Thursday showed a 13 BCF build. This was 9 to 12 BCF below news wire estimates and was the smallest injection for the period seen over the past 5 years.  Total storage rose to 3.199 TCF. This is +174 BCF/+5.75% versus the 5 year average, but -95 BCF/-2.88% versus last year's level. . We note that the EIA data showed a 13 BCF draw in the South Central region, which is home to the Gulf Coast LNG plants and to the Permian shale basin. We wonder if the rig count drop seen in recent weeks in the Permian basin is not seeing oil/gas production dropping and thus filtering through to these gas storage numbers.

Forecaster Atmospheric G2 said Thursday that forecasts shifted cooler across most of the US for August 31-September 4. (Barchart)

U.S. domestic natural gas production is estimated at 108.4 BCF/d today Friday, down from the average of 109.4 BCF/d so far in August, according to Bloomberg data. Celsius Energy noted  natural gas production dropped from nearly 110 BCF/d in late July to 106.7 BCF/d on Thursday. Yet, that is still up by 4.8 BCF/d compared to 2024, Celsius Energy commentary adds.

European natural-gas prices have risen this week as expectations of a Russia-Ukraine cease-fire wane and supply squeezes loom. The TTF futures are on track for a 4.1% weekly gain, entirely recovering from last week’s losses. Attention is now increasingly turning to maintenance work in Norway, which will lower Norwegian gas flows to Europe, ING analysts say in a note. European Union gas storage is close to 75% full at the moment, lagging the five-year average of 82% and well below last year’s 91%, analysts add. (WSJ) ING commentary adds : "  European prices will need to remain competitive relative to Asia to ensure enough LNG heads to Europe ahead of the next heating season. However, LNG send-outs in Europe have been trending lower since peaking in June."

In the LN NG options on the CME Thursday, 3,000 of the October January three month -$1.00 calls were sold against which 3,000 of the -$1.50 puts were purchased for a cost of 0.3 cents. Most of the -$1.00 call portion of the trade was liquidation, while the -$1.50 put portion was initiating based on CME open interest data. The October January futures spread settled at -$1.24, thus nearly in the middle between the 2 strikes, thus underscoring the near flat price that traded in the option strategy.

Technically, momentum basis the DC NG chart remains negative. Reuters commentary says that Thursday's NG price increase pushed the contract out of technically oversold territory. Open interest data from the CME suggests that part of Thursday's rally was due to short covering, as the soon to expire spot futures September contract saw open interest decline by 17,500 contracts. Support for the spot futures lies at this week's double bottom at 2.725 and then at 2.688 from lows seen last October/November.  Resistance at 2.851-2.858 was almost tested yesterday with a high of 2.849. Next resistance we see lies at 2.912-2.922.

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