At 15:03 GMT, Natural Gas futures are trading $2.327, down $0.233 or -9.10%.
Middle East Tensions Cool, Reducing Supply Risk
Market sentiment shifted as weekend strikes by Israel targeted Iranian military installations but avoided vital oil and nuclear infrastructure. Analysts interpreted this restraint as reducing the likelihood of a regional supply disruption, including Iran’s potential closure of the Strait of Hormuz, a major chokepoint for global oil and natural gas shipments. Eli Rubin of EBW Analytics noted that Israel’s decision to focus on specific military targets rather than broader infrastructure has calmed markets, diminishing the immediate risk premium in both oil and natural gas prices.
Rising U.S. Production Adds Downward Pressure
Natural gas supply gains have intensified the bearish sentiment. According to Wood Mackenzie, production in the Lower 48 states averaged 102.8 billion cubic feet per day (Bcf/d) over the weekend, holding steady at Monday’s early estimates. This level is near the summer’s peak of 103 Bcf/d and reflects a 2 Bcf/d increase from the autumn production lows. Increased output, coupled with tempered Middle East concerns, has pressured futures as demand growth expectations weaken.
Weaker Demand Outlook on Milder Weather
Milder weather forecasts across the U.S. have also curtailed expectations for short-term demand. Seasonal temperatures are projected to limit natural gas consumption for heating, further reducing immediate market demand. With the U.S. weather-driven consumption forecast low, production increases are seen as adding to domestic supply glut concerns.
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