Market Oversupply Driving Low Gas Prices: August ‘24 Insights for Commercial Real Estate

From a buyer’s perspective, the country is in a good fundamental position with natural gas. The market is oversupplied (~15% more gas in storage than the 5-year average), and this – in combination with lower-than-expected cooling demand and stifled LNG exports – has driven prices down. Even though this August has the potential to be the hottest in history, the market’s current fundamental position with storage is limiting price upside.

However, a historically small injection of natural gas in August could help reduce the bearish pressure on NYMEX futures, potentially allowing for modest price increases. These gains depend on continued hot weather and the absence of bearish factors, such as tropical storms, which could still drive prices down. Despite a somewhat favorable outlook, natural gas has limited chances to reduce surpluses to manageable levels by the fall.

All said, now is a great time for buyers to add to their gas portfolio. Fundamentally, we expect prices to remain tame until at least October, when storage will begin to decline and gas heating demand for winter will increase.