Natural gas futures slide 3.8% as record output weighs on prices

US natural gas futures fell for a fourth consecutive session, with the August contract settling down 3.8% at $2.662 per million British thermal units, as record output and ample inventories outweighed seasonal cooling demand.

"With the rollover to the September futures, the weather factor will begin to lose some bite at this later stage of the summer when the market will be forced to look ahead to the low-demand shoulder period," Ritterbusch & Associates said in a note.

Lower 48 production averaged 110.6 billion cubic feet a day so far in July, matching the prior monthly record, according to LSEG data. Storage remains above the five-year average, and feedgas flows to US LNG export plants have eased from recent highs partly because of maintenance at Freeport LNG in Texas. The September contract fell 3.1% to $2.701 per million British thermal units.

The persistent supply glut is flattening the seasonal forward curve. The March-over-April 2027 premium, a closely watched late-winter calendar spread, fell to a record low near 14 cents per million British thermal units, signaling the market sees little payoff for holding gas in storage through winter.

High renewable power generation is also limiting the amount of gas used to meet air conditioning demand, even as temperatures reach triple digits in Texas and other parts of the South. "Where temperatures are comfortable is across portions of the Great Lakes and Northeast," NatGasWeather.com said in a note. "However, even with hot weather patterns, power burns have been under-performing."

Short-term risk remains tilted to the downside, Ritterbusch said, with the August contract facing a weak expiration. The persistent decline in futures could pressure natural gas producers' revenues in the near term, while utility companies may benefit from lower input costs. The next key data point will be the weekly EIA storage report, which will show whether inventories continue to build above seasonal norms.

This article is for informational purposes only and does not constitute investment advice.