Natural Gas Stabilizes Above Key Support Amid Record Production

Natural gas prices have been holding above key support levels despite a recent decline. The August 20 settlement price for US Natural Gas was down by approximately 3%, with the September NYMEX contract falling to around $2.73/MMBtu. However, this drop is largely attributed to record production in the Lower 48, which reached a high of 111.4 Bcf/d in August.

The weather forecast remains moderately positive for demand, with predominantly above-normal temperatures expected through the beginning of September. This, combined with high power burn due to summer heat, has been gradually reducing storage surpluses. According to the latest EIA report, inventories increased by only 16 Bcf last week after rising by 36 Bcf a week earlier.

The total gas in storage reached 3.169 Tcf, which is 28 Bcf below last year's level but still 185 Bcf above the five-year average. The EIA expects around 3.985 Tcf of gas in storage by the end of October, which would be the highest pre-winter level in roughly a decade.

LNG exports have been offsetting record production, averaging around 17.2 Bcf/d in August and expected to reach 16.5 Bcf/d in the third quarter. The EIA also forecasts that marketed natural gas production in the U.S. will reach a record 122.5 Bcf/d in 2026.

The situation in the Middle East continues to create potential bullish risks, primarily through the global LNG market. As long as NATGAS trades above $2.72-2.70, the chances of renewed growth remain, but bulls need to break through resistance around $2.82-2.84 for this to happen.