Houston — NYMEX October natural gas futures dropped 6.9 cents Tuesday, as record production over the weekend put downward pressure on the market.
The front-month contract was at $2.847/MMBtu at 10:25 am EDT (1425 GMT), after trading in a range of $2.818 and $2.904 on Tuesday.
US dry gas production reached a record high over the long Labor Day Weekend, increasing to 83.4 Bcf/d Sunday. It has decreased to 82.5 Bcf/d Tuesday, according to S&P Global Platts Analytics.
Total demand -- including exports to Mexico and LNG exports -- decreased by 700 MMcf/d on the day to 75.8 Bcf/d Tuesday. Deliveries to the Sabine Pass terminal
Overall, the supply-demand balance has grown as of late as record production continued and demand backed off. This can possibly drive storage injections higher as summer months come to an end.
The bearish sentiment continued Tuesday, with power burn totals in the Midwest falling 251 MMcf/d, to 3.04 Bcf/d, according to Platts Analytics.
Looking ahead, the NYMEX winter strip averaged approximately $2.961/MMBtu on Tuesday as the market does not seem bothered by the storage deficit going into the winter months and as strong production seems to be deemed sufficient to take care of approaching demand.
All the bearish factors hampered the market the front-month contract reached its lowest levels since the beginning of August. The front-month contract has not broken $3/MMBtu since June 15 as strong dry gas production has kept a lid on the market.
Looking ahead, the most recent six- to 10-day temperature forecast from the National Weather Service calls for higher-than-average temperatures for much of the country, excluding the Pacific Northwest, which will put upward pressure on the market.
