Natural gas price weakens on record output and soft demand
U.S. natural gas futures are under pressure, trading near $3.096 per million British thermal units (MMBtu) as of July 24, marking the lowest price since late April. Traders are reacting to updated weather forecasts showing weaker-than-expected heat across the U.S., alongside continued record-breaking production.
Highlights
- Natural gas trades at $3.096 after breaking key support below $3.10
- Record July output of 107.2 bcfd weighs on sentiment despite strong LNG flows
- Cooling demand expected to soften amid milder heat forecast into early August
These developments have combined to weaken bullish expectations, despite strong LNG export levels. Technically, natural gas broke below a key ascending triangle structure earlier this week, losing the $3.10–$3.12 support zone that had underpinned bullish setups since late 2023. Price action has also dropped beneath the 20, 50, 100, and 200-day exponential moving averages, now clustered between $3.38 and $3.50. The RSI (14) has declined to 36.99, suggesting a bearish momentum shift.
Natural Gas Price Dynamics (Source: TradingView)
The market is now testing a support band between $3.05 and $2.95. This zone has historically attracted dip buyers, but failure to hold may expose downside toward $2.75 or even $2.60. Traders are watching for any signs of a reclaim above $3.30–$3.35 as a potential reversal zone, though without structural improvement or fresh catalysts, rebounds are expected to be shallow.
Supply and demand imbalance favors sellers
July’s Lower 48 production has climbed to a record 107.2 billion cubic feet per day (bcfd), surpassing the June high of 106.4 bcfd. This has kept storage levels 6% above seasonal norms, reducing the urgency for aggressive near-term buying.
While LNG exports remain strong, currently around 15.8 bcfd—the gains have not been enough to absorb the excess supply. Weather forecasts through August 6 show above-average temperatures, but the revised outlook now anticipates less intense heatwaves, thereby reducing expected gas-fired cooling demand.
Our earlier coverage emphasized the risk of technical failure if $3.10 broke, as well as the importance of revised weather inputs. Both conditions have played out, with natural gas now in a vulnerable position unless supply slows or extreme heat returns to shift demand dynamics quickly.
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