Natural gas futures have recently experienced a notable decline, dropping to a one-week low of less than $2.30 per million British thermal units (MMBtu). The Energy Information Administration (EIA) reported a larger-than-anticipated injection of 58 billion cubic feet into storage for the week ending September 13, exceeding the market’s expectation of a 53 billion cubic foot rise. This additional supply has resulted in storage levels that are now 8.6% above the five-year average, signaling a significant surplus in supply.
Seasonally, demand for natural gas tends to decline during the shoulder season of September and October, especially with milder weather forecasted, which further impacts current market conditions. Given the recent 40% price drop over the last two months, there are indications that producers may begin scaling back output by late 2024.
To put this in historical context, just a year ago, prices were significantly higher, fluctuating around $2.93 at the end of September 2023. Over that year, natural gas saw much volatility, with peaks hovering above the $3.80 mark during late October through early November 2023. In contrast, today’s low prices reflect the most substantial downward trend observed recently, marking a stark reversal from last year’s pricing environment. Overall, this current oversupply and seasonal demand trend puts additional pressure on natural gas prices, echoing the lows observed in early 2024.
