US overproduction keeps weighing on natural gas prices

US natural gas (NG) prices have recently hit two-month lows and are now consolidating near $2.89, remaining under significant pressure amid a growing domestic supply surplus. Production in the Lower 48 states reached 110.2 billion cubic feet per day, while inventories stood 6.6% above the 5-year seasonal average. These factors are weighing on the commodity, pushing it toward a local bottom.

The scheduled shutdown of the Freeport LNG plant—from July 10 till late August—is only making things worse. The terminal, with a capacity of 2.4 billion cubic feet per day, plays a key role in the country’s gas exports. Its current downtime means that the domestic surplus is likely to swell further. Another factor that we should take into account is the cooler weather in the southwestern region. According to forecasts, these temperatures will last through July 23, reducing air conditioning demand and putting additional pressure on prices.

There are no signs of a trend reversal from the supply side, either. The number of drilling rigs remains close to over-two-year peaks, providing a steady 3.7% annual rise in US gas production. With no weather anomalies or emergency outages, the fast-growing output will continue to weigh on NG quotes. The strength of the bearish trend is underscored by the market’s muted reaction to a 7.73% surge in power generation in early July.

Now, let’s analyze the technical picture. As of July 15, price dynamics look hesitant.  After a sudden drop, NG is trying to settle near $2.89, maintaining its short-term selling momentum. Quotes are well below $3.00, reflecting a firm bearish grip. A rising Chaikin Oscillator, however, hints at emerging buying interest. Unfortunately, this activity is not enough to trigger a turnaround, especially with the unfavorable fundamentals stacked against them.

Consider the following trading strategy:

Sell natural gas from the current level of $2.89, with Take profit at $2.75 and Stop loss at $3.00.

The forecast is pertinent from July 15 till July 22, 2026.