Natural Gas Futures Extend Losses to Seven Weeks on Ample Supply

Nymex natural gas posted a seventh straight weekly loss as strong production and soft LNG feedgas outweighed high seasonal power demand.

Nymex natural gas settled at $2.662 per million British thermal units, up 0.8% on the day but down 3.1% for the week — a seventh consecutive weekly decline — as strong production and soft LNG feedgas demand outweighed high seasonal power-sector consumption.

"On top of this bearish news, weather forecasts also trended cooler for the coming weeks, indicating lower demand for the power-plant fuel as consumers dial back on their air-conditioning use," Joe DeLaura, senior energy strategist at Rabobank, said in a note.

Prices face further downward pressure with a new pipeline set to carry gas out of the oversupplied Permian Basin into East Texas and closer to the benchmark Henry Hub in Louisiana, DeLaura said. The added takeaway capacity would feed more supply into the Gulf Coast corridor just as the market contends with an expanding inventory surplus.

The focus now shifts to the shoulder period between the cooling and heating seasons, when demand typically retreats and storage builds accelerate. Ritterbusch & Associates said bearish traders appear hesitant to press the market lower given proximity to long-term support near $2.50 per mmBtu, though prices could still drift toward that level barring broad-based hotter weather.

In early trading Friday, Nymex natural gas picked up 1.6% to $2.683 per mmBtu, recovering some ground after the previous session's decline on the expanding inventory surplus. The rebound was tentative, with the prompt contract still tracking toward its lowest weekly close in months.

The supply picture remains the dominant bearish force. Production has held at elevated levels across the Lower 48, while LNG feedgas demand has softened, leaving more gas to be absorbed into storage ahead of winter. The new Permian pipeline, once operational, would relieve takeaway constraints that have periodically pushed West Texas prices to discounts, redirecting that supply toward Henry Hub and the Gulf Coast export corridor.

Weather has offered little relief. Cooler forecasts for the coming weeks point to reduced air-conditioning demand, and the cooling season is beginning to wind down. "But even given such a change, the weather factor is beginning to lose effect as the cooling season winds down with the market forced to place a greater focus on the upcoming low-demand shoulder period," Ritterbusch & Associates said.

The bearish setup has kept the front of the curve under pressure even as the broader energy complex shows signs of firming. While crude benchmarks have drawn support from geopolitical risk in the Middle East, natural gas has traded on its own domestic fundamentals, with the oversupply in the Permian Basin and soft export demand leaving little to offset the seasonal demand retreat.

The seven-week losing streak marks the longest sustained decline for the prompt contract in recent months, with the market now testing the $2.50 area that traders have flagged as a key technical support level. For producers, the sustained weakness pressures cash margins and could slow drilling activity into the fourth quarter, while utilities and industrial consumers benefit from lower input costs.

Looking ahead, the market's direction into the fall will hinge on the pace of storage injections and the timing of LNG terminal maintenance. If inventories continue to build faster than seasonal norms, the prompt contract could test the $2.50 support level in the coming weeks. A recovery in feedgas demand or an extended heat wave, by contrast, could stall the decline and set up a firmer floor into the heating season.

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