Moderating temperatures and the lack of a threat from Tropical Storm Don kept pressure on natural-gas futures Friday as traders continue to see ample supply in the market.
Natural gas for September delivery recently fell 3.7 cents, or 0.9%, to $4.207 a million British thermal units on the New York Mercantile Exchange.
Futures continued falling Friday after Thursday saw a selloff from a larger-than-expected weekly inventory build.
The storage number brought the spotlight back onto high production levels, said Gene McGillian, an analyst with Tradition Energy.
Concerns over Tropical Storm Don in the Gulf of Mexico have also lessened as it seems the storm will be more beneficial to drought-stricken Texas rather than affect natural-gas production.
Major producers of oil and gas shut down some production ahead of the storm, but already BP PLC (BP, BP.LN) has said it is starting to send workers back to oil and gas platforms as the storm has passed.
Hot weather supportive of prices is also dissipating in some forecasts.
Mid-Atlantic states are expected to see some temperatures near 100 degrees Friday and Saturday along with the Southern Plains, but forecasts in the next two weeks are moderating back toward normal.
A pullback in the recent heat pattern is expected from the East and North by late next week and inside of the 11- to 15-day forecast, Commodity Weather Group said. Higher above-normal temperatures are still forecast for the Midwest in that period.
Some volatility in trading Friday could be expected as the month of July closes out.
"Coming off last week's highs some pre-weekend, and month-end book-squaring might be expected, particularly with the uncertainty of Washington reaching a debt accord quite high, but price erosion should continue into next week," said Kilduff Group energy analyst Mike Fitzpatrick in a note to clients.
Natural gas could follow equities and crude oil lower on concerns over the U.S. government reaching a decision on raising the debt ceiling.
If the U.S. has a credit downgrade, McGillian said natural gas will come under a little pressure, but not like the other side of the energy complex.
"The fact is we can't rule out a momentary dip below $4," he said of natural gas.
Still, McGillian noted that it would be hard for natural gas prices to stay low as buying is expected to come in when hurricane season nears its peak.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.29/MMBtu, according to IntercontinentalExchange, down 12.2 cents from Thursday's average. Natural gas for delivery through Monday at Transcontinental Zone 6 in New York recently traded at $4.78/MMBtu, down about 47 cents from the average a day earlier.