Record Production + Mild Weather = Short Natural GasRecord Production + Mild Weather = Short Natural Gas
First Target $3.08 gap fill from 2nd February 2025, Second Target $2.86 gap fill from 11th November 2024.
Current market data and analysis as of Tuesday, April 15, 2025, suggest that Natural Gas prices are under bearish pressure and likely to continue dropping from the current level of around $3.33.
Record US production: U.S. natural gas output hit a record daily high of 107.4 billion cubic feet over the recent weekend, surpassing previous records. April production is projected to remain at these elevated levels, increasing supply pressure.
Mild weather forecasts: Warmer-than-usual temperatures are expected to persist through late April, reducing heating demand in key markets like the U.S. and Europe. This seasonal demand drop is weighing on prices.
Lower demand forecasts: Recent forecasts indicate lower natural gas demand for the upcoming weeks compared to earlier estimates, further pressuring prices.
Inventory levels: U.S. gas inventories are about 4% below the five-year average due to cold spells earlier in the year, but ongoing injections and high production may replenish stocks, limiting price support.
Global price trends: Natural gas prices in Europe and North America have already seen significant declines in early April, influenced by seasonal demand drops and falling oil prices, which are correlated with gas prices.
Market forecasts: While some long-term forecasts expect prices to rise later in 2025 and 2026, near-term models and market sentiment remain bearish, with natural gas futures recently hitting a nine-week low near $3.30.
The combination of record-high production, mild weather reducing heating demand, and lower demand forecasts is creating bearish momentum in natural gas prices. Given these factors, it is likely that Natural Gas will continue to drop further from the current $3.33 level in the near term.
However, watch for potential support if inventories tighten or demand unexpectedly rises, but current data strongly favors continued price weakness.
Use a stop loss. I could be wrong. DYOR. This is not investment advice.
