Natural Gas Price Forecast: NG=F Slips to $2.65 as Supply Pressure Mounts

Natural Gas (NG=F) Price Forecast: Storage Builds, Weather Shifts, and LNG Demand Collide

Natural Gas Futures Slip Toward Nine-Month Lows

Natural Gas (NG=F) continues to struggle for direction, with front-month futures sliding to $2.65/MMBtu, marking fresh nine-month lows after failing to hold the $2.748 pivot. Mild late-summer weather across the U.S. has cut into cooling demand, with daily power burn dropping to 77.9 Bcf, down sharply from earlier August peaks. Traders are eyeing $2.574/MMBtu as the next critical support, with upside capped near $2.849 unless new catalysts appear.

Production Surges to Record Levels

Supply dynamics remain a weight on the market. U.S. Lower-48 dry gas production hit 109 Bcf/day, up 6.3% year-over-year, while active gas rigs hold at 122, just shy of a two-year high. The EIA lifted its 2025 production forecast to 106.44 Bcf/day, from July’s 105.9 Bcf/day, and its 2026 outlook to 106.09 Bcf/day. Such supply growth leaves little room for bulls, with abundant flows continuing to overwhelm modest demand.

Storage Build Miss Fails to Lift Sentiment

The latest EIA report showed storage injections of just +13 Bcf for the week ending August 15, well below the +35 Bcf five-year average and the consensus +18 Bcf. While typically bullish, traders shrugged off the miss given inventories are still 5.8% above seasonal norms and only 3% below last year’s levels. U.S. gas storage now sits comfortably ahead of winter, undermining the argument for any immediate tightness. Europe adds to this buffer: storage is 74% full, compared with a 5-year seasonal norm of 82%, and Norwegian flows remain robust at 319 mcm/day despite upcoming maintenance.

Global LNG Markets Add Volatility

Asian LNG demand is picking up, with importers replenishing stock after a hot summer, pushing TTF October contracts to $11.64/MMBtu. Competition between Europe and Asia for cargoes is tightening spreads and offering some price floor to U.S. LNG-linked hubs. U.S. LNG exports hit 15.7 Bcf/day, up 13.5% week-over-week, reflecting resilient overseas appetite even as domestic pricing weakens. With winter demand still months away, LNG remains the swing factor that could determine whether Henry Hub prices stabilize or extend their slide.

Regional Pricing Signals Bearish Bias

Spot markets across North America reinforce weakness. Henry Hub eased $0.09 to $2.65, while Algonquin Citygate fell $0.30, Eastern Gas North dropped $0.355, and SoCal Border averaged –$0.625. The Midwest regional average slipped to –$0.07, highlighting broad-based softness. The only notable outliers came from Westcoast Station 2 (+$0.095) and NOVA/AECO C (+$0.015), underscoring how local constraints occasionally temper an otherwise bearish continental picture.

Technical View: $2.574 as the Line in the Sand

On the charts, natural gas remains entrenched in a downtrend. The failure to reclaim $2.748 leaves bears in control, with the next downside target at $2.574/MMBtu. Resistance at $2.849 is unlikely to break without a fundamental shift, meaning any short-term rally risks being just a short-covering bounce. Momentum indicators are oversold but not extreme, suggesting room for further declines before a potential seasonal rebound in September or October.

Verdict on NG=F

At $2.65/MMBtu, natural gas is priced for weakness, with supply expansion and mild weather keeping pressure on the market. Without a sudden shift in temperatures or an LNG demand shock, the path of least resistance remains lower. The trade setup favors Sell-the-Rip strategies below $2.80, with downside risk extending to $2.50 and support firming only if storage builds undershoot again or LNG exports continue to climb. For now, NG=F remains a Sell, with opportunities to revisit the Buy side emerging only if the $2.574 floor holds and early winter weather flips sentiment.

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