Natural gas prices decline amid bearish US weather forecasts and production levels
Natural gas prices witnessed a sharp decline on Tuesday, with November futures falling to the lowest level in three weeks, under the dual pressures of mild weather forecast across the United States and rising domestic production levels to record levels.
Mild weather forecasts are stifling demand
Weather forecasts are one of the main factors behind this sharp decline, as most areas of the eastern half of the United States are expected to see:
- A rise in temperatures above normal during the period from October 19 to 23.
- Moderate weather will continue until late October.
- Decreased demand for natural gas for heating purposes.
These climate forecasts prompted investors to reduce their expectations for demand for natural gas, which led to increased selling pressure in the markets.
Record production puts pressure on prices
Besides climate factors, the natural gas market is experiencing additional downward pressure due to:
- Domestic production in the United States rose to levels close to record levels.
- The Energy Information Administration revised its 2025 production forecast by +0.5%.
- The expected production rises to 107.14 billion cubic feet per day, compared to 106.60 billion cubic feet in September expectations.
Market indicators indicate a continued decline
Active natural gas rigs in the United States hit a two-year high, confirming the market trend due to oversupply.
Analysts point out that:
- Current market conditions constitute an ideal environment for continued downward pressures.
- The combination of mild weather and high production creates a gap between supply and demand.
- Current price levels may witness further decline if current factors continue.
Future expectations
With continued mild weather forecast and high production levels, energy experts expect continued pressure on prices over the coming weeks, unless the United States sees a sudden change in weather patterns or an unexpected decline in production levels.
