The price of natural gas fell more than six percent on Wednesday. Prices fell to a 10-week low amid a forecast of cooler-than-expected weather for the next two weeks and lower raw materials from liquefied natural gas (LNG) export facilities, largely due to the shutdown of Freeport, Texas LNG due to Hurricane Beryl.
Energy traders pointed out that prices were also weighed down by the continued oversupply of stored gas compared to what is normal for this time of year. Analysts said there is now about 18% more gas in storage than usual.
Front-month gas futures NG1! for August delivery on the New York Mercantile Exchange fell 15.3 cents, or 7.0%, to settle at $2.035 per million British thermal units (mmBtu), their lowest close since May 2.
That kept the front-month in technically oversold territory for a third day in a row and the ninth time in the past 11 trading days.
In other news, the U.S. Energy Information Administration (EIA) revised peak hourly power demand on Monday down to 739,849 megawatts (MW), which would not break the prior all-time high of 742,600 MW set on July 20, 2022, and would only be the highest since usage peaked at 741,815 MW on July 27, 2023.
Earlier in the week, EIA said U.S. power demand hit a preliminary record high on Monday. Today, inventory will give direction the prices.
Financial firm LSEG said gas output in the Lower 48 U.S. states has risen to an average of 102.1 bcfd so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
On a daily basis, however, output was on track to drop by 3.5 bcfd over the past three days to a preliminary five-week low of 99.5 bcfd on Wednesday. Preliminary data is often revised later in the day.
Several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March. But higher prices in April, May and June prompted some drillers, including EQT
Meteorologists projected weather across the Lower 48 states would remain mostly near normal through July 24 before turning hotter than normal through at least Aug. 1.
That heat will likely force power generators to continue burning lots of gas to produce electricity to keep air conditioners humming. Power generators burned a daily record of 54.1 bcfd of gas on July 9, according to LSEG data.
Technical Outlook : Natural Gas Futures
Natural gas prices dropped over 6% yesterday. That was a biggest intraday drop after 20 June 2024, and after hitting a low 170.10 settled at 170.50.
Formation of a long bearish candle stick is still indicating for a bearishness in a near future. However, prices would need to break below 165.00 in order to test next support 158-152.00.
On the upside, immediate resistance is seen at 188 a break above only prices could recover towards 195-205.00.
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