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- Natural Gas Update September 4, 2025
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Overview
Natural Gas---NG is up 5.6 cents
NG futures are higher as production fell quite a bit yesterday and the near term weather picture has improved. The rally the past 24 hours comes even as the EIA data due out today is seen raising the 5 year average surplus. Wednesday's rally may also have been supported by short covering as CME NG open interest data shows a large decline, especially in the October contract.
The EIA gas storage data due out today at 10:30 AM EDT is seen as a build of 54 to 56 BCF as per news wire surveys. This compares to last year's build of 16 BCF and the 5 year average build of 36 BCF.
The production drops heard that boosted NG futures Wednesday's were seen due to pipeline maintenance in the Permian basin, while those in the Appalachian basin were seen as a function of very low spot cash prices, that have recently fallen to near $1.50, as per NGI reporting. Bloomberg data seen Wednesday estimated lower 48 dry gas production at 105.82 BCF/d, down from the previous day of 108.45 BCF/d. US domestic natural gas production is estimated today at 107.16 BCF/d compared to 108 BCF/d over the previous week and the 30-day average of 109.13 BCF/d, according to BNEF.
The weather picture has improved with the Midwest teasing cooler temperatures into the weekend and parts of Texas showing above average warmth in the 10 day forecast. As one analyst comments: the bearish weather picture seen in prior days has turned more neutral.
Open interest data from the CME shows NG futures open interest having declined by over 20,000 contracts with notable drops in the October 2025 and January 2026 contracts. Given the strong uptick in prices seen Wednesday, we take the open interest drop as being short covering.
EIA data shows wind and hydro power generation ended August at the lowest levels in the past 6 years and September has started off in the same way. But, solar and nuclear power generation have been the highest seen in the past 6 years since the latter half of August.
Some Japanese LNG buyers have returned to the spot market, seeking additional prompt cargoes including via a swap tender, amid forecasts of prolonged heat waves in the country, Platts reports. The JKM futures for October delivery are seen near $11.225 as per CME futures data. The contract has settled into a trading range of late basically between $11.00 and $11.50/ MMbtu. In prior months much was made of a $10 price possibly bringing buyers to the market, in particular Chinese buyers, who have a domestic gas price that is below $10, thus making purchase of LNG for import disadvantageous.
One analyst comment seen Wednesday :" (NG up to $3.09 is seeing ) the longest price winning streak since February, and the first time in months natural gas has looked technically overbought." The 5 day NG rally is the longest winning streak seen since Wednesday, Feb. 19, 2025, when the market rose for seven straight sessions, as per Dow Jones Market data. Another comment seen :" "A significant upside price limiter still exists in the form of generally mild temperature forecasts that now extend well into the third week of this month."
The market is on track today for a 7th straight day of gains, which would be equal to the streak seen in February. The market is not overbought as yet. Resistance above lies at 3.145-3.148 and then at 3.186-3.187. Support lies at 3.011-3.014.
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Disclaimer
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