Natural Gas Update August 4, 2025

Overview

Natural Gas--NG is down 7.2 cents
NG spot futures are lower, but the chart shows a sideways pattern over the past 8 sessions. A lack of conviction in either direction for prices may have set in for the NG market. Strong feedgas demand of late and looming heat for the middle of August are offset by continued strong production.

Friday's Baker Hughes report showed that the gas rigs count rose by two to 124, their highest since August 2023. This count reaffirms the robust NG production seen of late. U.S. domestic natural gas production was up to over 109 BCF/d again at the weekend compared to the 30-day average of 108.4 BCF/d and the record high of 109.9 BCF/d on July 28, according to Bloomberg data.

On Saturday, LNG feedgas demand rose to 16.4 BCF/d, the highest since July 15 & up +3.3 BCF/d vs last year. (Celsius Energy)

On Friday, forecaster Atmospheric G2 said that forecasts shifted warmer for the Midwest, Southwest, and Texas for August 6-10, and forecasts turned hotter across much of the eastern half of the US for August 11-15. (Barchart)

NG futures volume on the CME on Friday was low at under 300,000 contracts, which we take as suggesting a lack of conviction by either bears or bulls on market direction. This sentiment is echoed by one analyst's comment: " After a vicious sell-off the previous week, the natural gas sector found the bears at least temporarily exhausted but still without a solid bullish catalyst to drive a reversal, leading to the period of sideways trading."

In the week ended Tuesday July 29, money managers mostly added longs such that their net shorts dropped by 21,115 contracts to a total of 13,005 contracts. This is the lowest net short total since money managers were net long in the week of April 17.

Strong nuclear output and coal-fired power generation have helped meet power load in Asia amid heatwaves this summer. Since the beginning of the year, Asian LNG imports have fallen by 6% to 156.35 million tons (Mt), when compared to the same period in 2024, according to Kpler. Chinese demand has been sluggish, to some degree held back by the high prices for global LNG compared to the domestic price seen in China. (NGI) But, Asian end-users are expected to ramp up summer LNG procurement activities to meet rising cooling demand as Northeast Asia grapples with unprecedented heat waves. Demand from Japan has begun to emerge, as high temperatures have fuelled increased demand for prompt deliveries. Other Asian end-users were on the sidelines amid higher prices.  (LNG Industry.com) Asian spot LNG prices inched up after two weeks of declines as geopolitical risk factors including US threats of sanctions Russian energy lent support. Asian LNG imports are expected to rise in August driven by power generation demand in Japan and South Korea: Bloomberg.

Technically, NG spot futures are currently holding on to positive momentum, despite the sideways action of late. Support is seen at last week's low of 2.972 and then not until 2.858-2.859. Resistance comes in at 3.140-3.145 and then at 3.186-3.187.

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