Nat-Gas Prices Plummet as Cooler Temps and El Niño Forecasts Weigh In

Natural gas prices plummeted to their lowest level in two and a half months on Monday, closing at -0.104 (-3.62%) for August Nymex natural gas (NGQ26). The decline is largely attributed to forecasts calling for near-normal temperatures across the central and eastern US for August 1-5, reducing the need for air conditioning.

According to the Commodity Weather Group, these cooler temperatures will diminish nat-gas prices in the short term. In the medium term, speculation about a powerful El Niño weather system bringing warmer-than-normal temperatures to the Northern Hemisphere this fall and winter is also bearish for nat-gas prices, as it reduces heating demand.

US dry gas production on Monday was 113.1 bcf/day (+3.7% y/y), while lower-48 state gas demand was 81.4 bcf/day (+2.7% y/y). Estimated LNG net flows to US LNG export terminals were 18.1 bcf/day (+2.4% w/w).

Higher US nat-gas production projections are also negative for prices, as evidenced by the EIA's July 7 forecast increase of 111.2 bcf/day for 2026 US dry nat-gas production.