Natural Gas News: Bearish Market Eyes $2.725 Floor Despite Bullish EIA Report
Can the EIA Bullish Surprise Overcome Cooling Demand Trends?
Thursday’s EIA report provided near-term support, with inventories rising just +13 Bcf for the week ending August 15—well below consensus expectations of +18 Bcf and the five-year average of +35 Bcf. This bullish miss sent September Nymex futures (NGU25) up +2.69%, closing at $2.828. However, despite the surprise, storage remains +5.8% above the five-year seasonal average, underscoring a well-supplied market.
Weather continues to pressure the bullish case. NatGasWeather noted that national demand will ease in the coming week, as weather systems move across the Midwest, Ohio Valley, and Northeast. Temperatures are forecast to drop into the mid-60s to low 80s, reducing the need for cooling. Further out, forecasts from Atmospheric G2 point to cooler conditions from August 31 to September 4, a stretch likely to suppress demand from power generators.
How Much Does Soaring U.S. Production Weigh on Prices?
The bearish headwind remains supply. U.S. dry gas production hit 107.5 Bcf/day on Thursday—up +5.2% year-over-year—according to BNEF. Meanwhile, the EIA lifted its 2025 production forecast to 106.44 Bcf/day, up from July’s 105.9 Bcf/day estimate, and raised 2026’s projection to 106.09 Bcf/day. The rig count is also nearing a two-year high, reinforcing the production ceiling over prices.
Lower-48 demand clocked in at 79.4 Bcf/day (+6.1% y/y), but LNG net flows fell to 14.6 Bcf/day, a -6.9% drop from the previous week. That decline in LNG export demand could further cap any upside in prices, despite supportive domestic electricity output data showing a +7.1% y/y gain for the week ending August 16.