Natural Gas Futures Price Collapse: Record Production and Storage Weigh Heavily

Natural gas futures plummeted to an 11-week low on Tuesday, settling at $2.72 per million British thermal units (MMBtu) after a sharp decline of around 3.5%. The front-month contract had already touched its weakest print since May 7 earlier in the session.

The collapse has been severe, with futures down over 15% across July and more than 11% over the past four weeks. A contract that opened above $3.20 is now closing below $2.80.

Three forces are driving the price down: record production, storage levels 6.4% above the five-year seasonal average, and LNG feedgas at 17.2 Bcfd, removing the release valve for excess domestic supply.