Lower Natural Gas Prices Today as Market Slows

Natural gas futures are down for Friday, trading close to where they were on Thursday. Does this mean market volatility in the near future?

Gas production is down as well, falling to 100 Bcf/d, partly due to the damage caused by Hurricane Beryl as it sweeps through the northwestern region of the world. Now that the storm has mostly dissipated, gas production may start to increase, driving prices down further.

If the price is going to rally, it would require that gas production stay low, but demand from gas and oil workers from job security may prevent that from happening. Natural gas was trading down 1.88% today, a drop of $0.040 to $2.085.

Storage reports from the EIA revealed that there was a lower than expected net increase of 10 Bcf. The anticipated numbers were between 23 and 29 Bcf, and the consensus is that the lower storage numbers are due primarily to Hurricane Beryl. We may see those numbers climb back up in the weeks following as the damage is repaired and oil production picks up.

What Will the Market Do?

The current price around the $2.00 mark could be psychologically critical. If the price dips below that level, we could see a sharp decline down to $1.880. Price increases could also be sharp, but they should not be expected to stay high.

No new buying interests are anticipated to help drive the market price higher for US natural gas. Instead, the demand will likely stay low until just before the winter months when demand naturally increases.

There may be a rally coming soon, though, if gas production remains low. The impact of Hurricane Beryl could help keep the production minimized as gas facilities realize they can sustain themselves at those lower levels for a little longer to help drive up prices.

Current pricing trends point toward the prices dropping slightly in the short term and the long term. However, the current state of the gas market could result in a price rally for the short term.