Nat-Gas Prices Plummet on Larger-Than-Expected Storage Build

Natural gas prices plummeted to a 3.25-month low on Thursday after the Energy Information Administration (EIA) reported a larger-than-expected storage build. The EIA said that natural gas inventories rose by +33 bcf in the week ended July 31, above expectations of +30 bcf and well above the five-year average of +23 bcf.

The drop in prices was contained somewhat by forecasts for warmer US weather, which could boost demand from electricity providers. The Commodity Weather Group said that temperatures are expected to be above-average across the Northeast and western US through August 10, potentially increasing air conditioning use and gas demand.

However, a bearish factor for natural gas prices in the medium term is speculation about a powerful El Niño weather system bringing warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand. Additionally, projections for higher US natural gas production are negative for prices, with the EIA raising its forecast for 2026 US dry natural gas production to 111.2 bcf/day from a June estimate of 111.0 bcf/day.