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Natural gas prices plunged on Monday as investors reacted to reports of increased production and forecasts of cooler temperatures starting at mid-July. As we mentioned about two weeks ago, the price action strongly suggested that we were no longer in a weather market because a lingering heat dome was not in the picture and that rising production would eventually overcome normal demand.Essentially, prices fell and could continue to retreat because data showing record-level production combined with expectations for more seasonal weather later in the month offset the large storage deficits and bullish near-term forecasts.According to NatGasWeather, “production is just too strong for the markets to ignore, aided by reports of weekend production at or exceeding all-time highs, thereby weighing more heavily on prices than hefty deficits and hotter than normal temperatures.”Genscape, Inc. data showed that lower 48 production appears to have cracked the 80 Bcf/d mark. Following pipeline reported revisions to nominations data, its production team showed volumes hit around 80.05 Bcf/d on June 28 and June 29.Bespoke Weather Services said it attributed Monday’s sell-off to production reaching “record levels” over the week-end and to a slight cooling in medium-term forecasts.“Risk remains to the downside moving through the week as well, as though short-term forecasts have very significant heat and power burns remain quite tight to see production as easily canceling those factors out,” Bespoke said. “Longer-term we would expect forecasts to gradually cool through the second half of July, further exacerbating downside in a natural gas market that needs record heat to be sustained to cancel out supply growth.”


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