Natural Gas Price (NG=F) Struggles Below $3.236 as Record Output, Storage Surplus Weigh on Prices

Natural Gas (NG=F) Futures Struggle Below Resistance as Supply Surges Outpace Demand

U.S. natural gas prices remain stuck in a fragile range, closing last week at $2.916 per MMBtu on the NYMEX September contract, a modest gain of 2.6% in Friday’s session but still down for the fourth consecutive week. The market continues to battle the weight of record output, stubbornly high storage levels, and uncertain demand conditions. Technicals point to persistent pressure as long as NG=F trades below the $3.236 resistance level, the midpoint of the recent $3.707–$2.764 range. Until that ceiling is reclaimed, the short-term bias leans bearish, and rallies risk being sold into by market participants who see oversupply as a structural headwind.

Production at Record Highs: Supply Swamps Seasonal Demand

Dry natural gas production in the Lower 48 hit 109.9 bcf/day last week, a staggering 7.3% year-on-year increase according to BloombergNEF data. Average U.S. output for August so far stands at 108.2 bcf/day, surpassing the prior monthly record of 107.9 bcf/day set in July. The EIA’s latest Short-Term Energy Outlook pushed its 2025 forecast up to 106.44 bcf/day, with 2026 at 106.09 bcf/day, reflecting sustained rig activity. Baker Hughes data showed 122 rigs drilling for gas, near a two-year peak and well above the 94-rig low in late 2024. This output surge has muted any weather-driven demand spikes and keeps inventories well stocked heading into the fall.

Storage Builds Remain Heavy and Bearish for Price Outlook

Inventories continue to absorb the output boom. The most recent EIA report showed a +56 bcf injection, comfortably above both expectations (+54 bcf) and the five-year average (+33 bcf). U.S. storage levels now sit 6.6% above seasonal norms, though they remain 2.4% below year-ago levels. In Europe, stocks are 72% full, compared with a five-year average of 79%, suggesting comfortable global supply coverage. Unless a sharp weather shock emerges, this storage cushion limits upside risk for NG=F and continues to anchor futures below the $3.20 threshold.

Mixed Weather, Hurricane Erin, and Power Demand Fluctuations

Weather remains a wild card. Forecasts for August 20–24 show hotter-than-normal conditions in the western U.S., but cooler temperatures in the East, capping aggregate demand. Power generation data reflect this imbalance: the Edison Electric Institute reported U.S. electricity output at 93,293 GWh for the week ended August 9, down 1.9% year-over-year, even as annualized production remains up 2.6%. Hurricane Erin, strengthening in the Atlantic, complicates outlooks. While storms often boost gas prices by disrupting Gulf production, only 2% of U.S. supply originates offshore. Analysts caution that hurricanes are more likely to cut demand by shutting LNG plants and reducing power usage than to spark sustained bullish rallies.

LNG Exports Provide Support but Not Enough to Shift the Trend

Flows to U.S. LNG terminals averaged 16.2 bcf/day so far in August, setting a fresh record, up from 15.5 bcf/day in July and eclipsing the April high of 16.0 bcf/day. This export strength adds structural demand but is not enough to counterbalance surging domestic output and elevated inventories. With total U.S. demand, including exports, expected to ease from 111.7 bcf/day this week to 110.9 bcf/day next week and 109.6 bcf/day in two weeks, momentum is not aligned for a significant price recovery unless LNG flows materially exceed expectations or European buyers bid more aggressively into the fall.

Global Context: Angola’s LNG Ambitions and Turkish Spot Prices

International supply developments reinforce the global oversupply theme. Angola’s Azule Energy recently discovered more than 1 trillion cubic feet of offshore gas, positioning the country to raise LNG exports into Europe and Asia. At the same time, Turkey’s spot market set prices at 14,435 lira per 1,000 cubic meters (roughly $354 at prevailing FX), with total daily trade volume dropping to 450,000 cubic meters, down 27% from the prior day. These benchmarks illustrate that despite local fluctuations, global gas balances remain well supplied, pressuring benchmark contracts like NG=F to struggle for upside traction.

Short-Term Technicals and Strategic Outlook for NG=F

From a market structure standpoint, natural gas futures continue to coil near multi-month lows. The technical floor sits near $2.764, with long-term support around $2.574. A decisive break below these levels would open room for further declines into the low $2s. Conversely, any rally will face stiff resistance at $3.236, where sellers are expected to reload. Until NG=F convincingly clears that mark, sentiment remains tilted bearish. Traders are increasingly eyeing a potential seasonal recovery later in Q4 as inventories decline and LNG demand strengthens, but near-term risks skew to the downside.

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