Natural Gas Update August 5, 2025

Overview

Natural Gas--NG is up 6.3 cents
NG is higher as likely some bargain hunting and short covering are at work as prices yesterday fell to a more than 3 month low.

Comments seen re Monday's down move in NG futures prices :"hefty supplies more than offset expectations for August heat waves." "Gas demand for power generation was at its highest of the summer last week, but is on track for a year-on-year decline reflecting higher gas prices, competitive coal and renewable energy."   Strong production and the uptick in the gas rig count seen Friday were said to be weighing on NG prices Monday. As a colleague says: "Production needs to fall before I can get bullish medium term."

The EIA gas storage number due out this week is seen as a build of 13 to 16 BCF. That compares to last year's build of 21 BCF and the 5 year average build of 29 BCF. Reasons given for the low storage number are less wind generation during the reporting week. After a large increase last week, wind generation fell 26.5% week/week, as per EIA data. Natural gas-fired generation, meanwhile, jumped 14% on the week to support cooling demand due to the heat seen in much of the country. The small storage increase comes even as LNG feedgas demand was down 0.8 BCF/d during the reporting week.

U.S. domestic natural gas production was down slightly to 108.9 BCF/d yesterday, but it remains strong compared to the 30 day average of 108.4 BCF/d and is up 4.4 BCF/d versus this time last year, according to Bloomberg data.

On Monday, Reuters forecast demand for this week at 105.8 BCF/d rising next week to 110.5 BCF/d. This week's forecast was down 2.8 BCF/d versus that seen mid-week last week.

NG futures open interest on the CME rose by nearly 27,000 contracts in Monday's activity. We see this as mostly new short positions. The increase was seen in the months from September to January.

"A strong price rally toward the $3.50 area cannot be ruled out should the temperatures show another period of extreme heat amid some injection of storm premium, especially if European gas demand increases in response to the U.S. tariff factor and possible Russian sanctions," analysts at energy advisory firm Ritterbusch and Associates said in a note.

Technically momentum basis the DC chart for NG is neutral. The spot futures are currently having an inside trading day versus yesterday's price range. One analyst's view is :"weakness is likely if $3.00 fails to break convincingly. Price action remains dominated by lower highs and lower lows, typical of a controlled downtrend. " But, it is worth noting that the NG futures have been below $3.00 for all of 12 sessions since late Nov. 2024. At that time the NG began a rally that kept $3.00 as a foothold during the winter months.

NG spot futures have support at yesterday's low of 2.895 and then at the key lows at 2.858-2.859. Resistance is seen at 3.074-3.078 and then at 3.140-3.145.

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