U.S. natural gas slides to six-week low as weather forecasts shift cooler (NYSEARCA:UNG)

U.S. natural gas futures tumbled to six-week lows Monday, pressured by a loss of demand implied in weekend weather forecasts and recovering U.S. production, with analysts looking for support around $2.50/MMBtu, a level not seen since late May.

“Natural gas has been chipping away at the huge storage surplus for weeks as the summer heatwave forced small seasonal builds. But futures have turned their back on the heat wave and the slide in the storage surplus,” Mizuho’s Robert Yawger said in a note.

Forecasts for July 6-10 are trending cooler in the central part of the U.S., while summer heat continues for much of the rest of the country, particularly the West, according to the Maxar WeatherDesk.

Front-month Nymex natural gas (NG1:COM) for August delivery ended -4.7% to $2.478/MMBtu, dropping 7.7% in the last two sessions to the lowest settlement value since May 15.

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U.S natural gas production is “so strong that we will face a deficit when pigs fly,” Manish Raj, managing director at Velandera Energy Partners, told MarketWatch. “Even the scorching summer power demand is unable to tame the amount of gas in storage.”

Also, “although the market is nervous about Hurricane Beryl, we refuse to believe it is likely to cause oil and gas disruptions,” Raj said, adding that energy facilities in the Gulf of Mexico are designed to withstand hurricanes, “barring abnormal conditions.”