Analyst Highlights August Natural Gas Contract ‘Collapse’

In an EBW Analytics Group report sent to Rigzone by the EBW team on Tuesday, Eli Rubin, an energy analyst at the company, highlighted a “collapse” in the August natural gas contract on Monday.

The contract closed at $3.456 per million British thermal units (MMBtu) yesterday, which marked a 28.3 cent, or 7.6 percent drop, from the previous close, the report outlined. 

“Yesterday’s natural gas price implosion fully erased Friday’s gains, with strong supply readings, milder Week 3 weather (particularly in Texas and the Southeast), and ongoing Henry Hub spot market softness dragging down the curve,” Rubin said in the report.

“LNG bright spots are beginning to emerge, however, with Corpus Christi nominations rising to match a facility high, and LNG Canada loading its first cargo. Early-cycle U.S. LNG demand readings are already 1.9 billion cubic feet per day (Bcfpd) above the June average,” he added.

“Critical support near $3.40 per MMBtu (last Thursday’s intraday low) may be determinative for the NYMEX front-month. If support can hold, LNG solidifies at higher levels, and elevated late June production readings decline, expanding Week 2 CDDs [Cooling Degree Days] surpassing the late June heat wave could propel upside over the next 7-10 days,” Rubin went on to state.

“If support fails, however, it may open the door to another leg lower at the front of the NYMEX curve,” Rubin warned in the report.

In an EBW Analytics Group report sent to Rigzone by the EBW team on Monday, Rubin highlighted that natural gas retreated after Friday’s gain. The report pointed out that the August natural gas contract closed at $3.739 per MMBtu on Friday. This represented a 21.3 cent, or 6.0 percent, rise compared to the previous close, the report outlined.

“While the August natural gas contract rose 21.3 cents on Friday after plunging 42.3 cents in the first four sessions last week, it appears too much, too soon,” Rubin warned in that report.

“Henry Hub spot prices averaged $3.23 over the weekend and production readings are climbing into the end of June,” he added.

“However, pipeline nomination patterns often suggest higher supply into the end of the month, followed by phantom first of month declines – likely later this week. LNG feedgas reached a seven week high at 15.3 Bcfpd on Sunday and may continue to rise into mid-July as Corpus Christi brings online a third midscale train,” he continued.

“Weather will remain a primary driver of prices, with Week 2 CDDs surpassing the late-June heat wave,” he went on to state.

In that report, Rubin warned that the July 4 holiday may dent natural gas demand this week and next, “with another retest of technical support early this week”.

“Dependent on mid to late July weather, a more durable rebound remains likely after the holiday weekend,” Rubin said in the report.

A research note sent to Rigzone by the JPM Commodities Research team on Tuesday showed that J.P. Morgan expects the U.S. Natural Gas Henry Hub price to average $3.90 per MMBtu in the second quarter of 2025, $4.00 per MMBtu in the third quarter, and $3.75 per MMBtu in the fourth quarter. J.P. Morgan sees the commodity coming in at $3.80 per MMBtu overall in 2025, according to the research note.

EBW Analytics Group provides independent expert analysis of natural gas, electricity, and crude oil markets, the company’s site states.

Rubin is an expert in econometrics, statistics, microeconomics, and energy-related public policy, the site adds, noting that he is “instrumental in designing the algorithms used in our models, and in assessing the potential discrepancies between theoretical and practical market effects of models and historical results”.

On its site, J.P. Morgan describes itself as a leading global financial services firm with assets of $3.9 trillion and operations worldwide. The company has “a legacy dating back to 1799”, its site points out.

To contact the author, email andreas.exarheas@rigzone.com