U.S. Natural Gas Futures Drop on Weak Demand and Falling LNG Exports

Daily Natural Gas

U.S. natural gas futures are trending lower on Tuesday, threatening to erase this week’s earlier gains. Weak domestic demand and a drop in liquefied natural gas (LNG) exports are applying sustained pressure on prices. Market participants are eyeing the critical $2.201 support level, with a break below potentially leading to a sharp decline toward $1.883. On the upside, resistance stands at $2.375, with potential gains extending to $2.510 or $2.543, where selling pressure is likely to re-emerge.

At 11:51 GMT, Natural Gas futures are trading $2.263, down $0.048 or -2.08%.

Declining LNG Exports Weigh on Prices

The recent slide in U.S. LNG exports has added a bearish tone to the market. Feed gas flows to U.S. LNG terminals fell to 11.8 billion cubic feet per day (Bcf/d) on Tuesday, down 0.7 Bcf/d from Monday, marking a second consecutive day of declines. The reduction stems from ongoing maintenance at the Cameron LNG facility in Louisiana, curbing operational capacity. This drop in exports removes a key support pillar for natural gas prices, especially during periods of lighter domestic consumption.

As the shoulder season persists, when demand for heating or cooling is typically lower, weaker LNG exports amplify downside risks in the market.

Mild Weather Forecast Dampens Demand Outlook

Mild weather across most of the U.S. continues to limit natural gas demand. Despite a slight increase in demand projections from both the Global Forecast System (GFS) and European Centre (EC) models on Monday, overall consumption remains weak. Cooler temperatures are forecasted in the Northwest and Upper Midwest, with highs in the 40s-50s and lows in the 20s-30s. However, the bulk of the U.S. will experience milder conditions, with temperatures ranging from the 60s to 80s, curbing the need for heating.

Even with some heating demand in the northern regions, the overall national forecast remains bearish for gas consumption.

Market Focus Shifts to Supply and Storage Data

Rising natural gas production adds further downside pressure. Thursday’s upcoming EIA Weekly Storage report is expected to show a build of 61 Bcf, signaling ample supply amid soft demand. Market sentiment remains cautious, with traders balancing the potential for short-term profit-taking against the longer-term risks of oversupply.

With production continuing to rise and LNG exports weakening, traders are positioning for a bearish near-term outlook.

Market Forecast: Bearish Sentiment Dominates

Natural gas futures face significant headwinds in the short term. The combination of weak domestic demand, falling LNG exports, and rising supply points to a bearish outlook. A break below the $2.201 support level could trigger a rapid move down to $1.883. While a breach of resistance at $2.375 could spark a brief rally, sellers are expected to cap any upside near $2.510 to $2.543. Overall, traders should brace for continued downside risk, with any recovery likely driven by short-term factors rather than a fundamental shift in market conditions.