Natural Gas: Market Awaits EIA Report as Inventory Forecast Boosts Bullish Outlook

Natural Gas Futures Edge Higher Ahead of EIA Storage Report

U.S. natural gas futures are climbing as traders anticipate the Energy Information Administration’s (EIA) Weekly Storage report. This report, scheduled for release today, is expected to show a smaller-than-average injection into storage, providing a bullish catalyst for the market. However, traders are facing resistance levels that could cap gains and bring potential downside risk.

At 13:16 GMT, Natural Gas futures are trading $2.952, up $0.066 or +2.29%.

Key Resistance Levels in Focus

Natural gas futures are encountering significant technical resistance, which may slow upward momentum. The market is nearing a critical 50% retracement level at $2.939, closely followed by the 200-day moving average at $2.968. Yesterday’s price action also saw futures test the psychological $3.00 mark, a barrier that prevented further gains. A sustained break above this level, however, could spark an acceleration in buying, with the next target being the Fibonacci level at $3.110.

On the downside, failure to breach resistance could trigger renewed selling pressure. If downward momentum picks up, traders may look for support around $2.825. A break below this point could lead to sharper declines, with potential pivot points at $2.702, $2.653, and $2.601, all possible downside targets.

Market Anticipates Bullish EIA Report

Traders are positioning themselves ahead of the EIA report, which is expected to show a smaller-than-average injection into natural gas storage. According to industry estimates, the consensus points to a build of +56 billion cubic feet (Bcf), well below the five-year average of +98 Bcf for this time of year. The market has been supported by warmer-than-normal temperatures across the U.S., particularly in Texas, which has boosted cooling demand. In addition, lower wind energy generation last week has contributed to increased natural gas usage, adding to the bullish sentiment.

NatGasWeather, a prominent industry forecaster, suggests that today’s storage report could surprise to the upside, with some estimates as low as +53 Bcf. A smaller-than-expected build would further shrink the storage surplus and support higher prices.

Near-Term Weather Outlook and Demand

Looking at the weather forecast for the upcoming week, much of the U.S. is expected to experience mild temperatures, with highs ranging from the 60s to 80s across most regions. However, hotter conditions persist in California, the Southwest, and parts of Texas, where temperatures are reaching into the 90s and 100s. Despite the regional heat, overall natural gas demand is expected to be low over the next seven days, which could temper the market’s bullish momentum.

Market Forecast: Cautiously Bullish

The natural gas market appears cautiously bullish in the short term. A smaller-than-expected storage build would support prices, especially if the market breaks through key resistance at $3.00. However, failure to overcome these resistance levels could lead to downside risks, with potential testing of support at $2.825 and lower pivot levels. Traders should remain watchful of today’s EIA report, as it could be a decisive factor in determining the market’s next move.