US natural gas prices fall to an 11-week low, with record production and inventory pressure driving the decline

(1) US natural gas futures prices fell sharply by about 3% on Monday, hitting the lowest closing level since early May. This was mainly due to multiple bearish factors resonating together, including domestic production continuously reaching record highs, a drop in feedstock gas flow for liquefied natural gas exports, and abundant inventories. (2) The supply-side pressure is particularly notable. In the US mainland 48 states, average daily production this month has risen to near the monthly historical peak, and on Sunday set a new single-day output record. The ongoing pace of high production has significantly weakened price upward momentum. (3) Regarding inventories, the mild spring weather has led to a faster accumulation rate. Institutions estimate that current inventory levels are more than 6 percentage points higher than the same period in previous years, with the surplus still expanding. This further intensifies market concerns about supply-demand balance. (4) Position structure shows that speculative accounts have pushed net short positions to the highest level since March last year, reflecting a consistent pessimistic expectation among capital for the short-term outlook. Meanwhile, nearby contracts have entered a technically oversold zone for the first time in nearly two weeks. (5) On the forward curve, the premium of the September contract over the August contract has set a new record high for three consecutive days, suggesting the market is not worried about supply shortages during the cooling peak in August, but is rather reserving discount space for the autumn inventory-building season. Despite meteorological forecasts showing that temperatures will remain warm and power demand high before mid-August, record production capacity is sufficient to cover consumption increments, and gas prices are expected to remain under downward pressure in the short term.