Natural Gas News: Bearish Forecast as Warm Weather Weighs on Futures

Natural Gas Futures Edge Higher, But Upside Remains Limited as Fundamentals Weaken

U.S. natural gas futures are staging a modest recovery Tuesday following Monday’s sharp selloff, but price action remains constrained by shifting weather forecasts and robust supply.

May contracts are currently hovering around the key $3.361 level, a 50% retracement mark that’s acting as a pivot point. A decisive move below this could trigger a deeper decline, while resistance looms near $3.613, with a potential cap at the 50-day moving average of $3.902.

At 11:00 GMT, Natural Gas Futures are trading $3.374, up $0.049 or +1.47%.

Is Warm Weather Capping Demand Potential?

Warmer-than-expected weather forecasts for late April have weighed heavily on futures, triggering a third consecutive session of losses on Monday. The Commodity Weather Group projected above-normal temperatures for much of the eastern U.S. and Texas between April 19–23, reducing the need for late-season heating demand. NatGasWeather also expects low demand early in the week and only moderate demand thereafter, as high pressure dominates much of the continental U.S.

Production Pressures and Inventory Concerns Resurface

Lower 48 dry gas production remains strong, hitting 106.7 Bcf/day on Monday — up 5.7 Bcf year-over-year, according to BloombergNEF. Meanwhile, net flows to LNG export terminals came in at 16.2 Bcf/day, up slightly week-on-week. However, increased output continues to outpace demand, which stood at 69.4 Bcf/day (+3.2% y/y). This imbalance could drive further pressure on prices unless demand improves substantially.

Last week’s EIA storage report showed a 57 Bcf injection — roughly in line with expectations but significantly above the 5-year average for this time of year. Despite this, inventories remain 19.8% lower year-over-year and 2.1% below the five-year average, underscoring that while short-term storage builds are bearish, the broader supply picture is still relatively tight.

Could LNG Policy Changes Support Prices Longer Term?

In a potentially supportive development for the long term, President Trump’s reversal of the Biden-era pause on new LNG export approvals could add bullish pressure. If the U.S. greenlights new projects, the increased export capacity may tighten domestic supply in future years. However, this factor has limited short-term impact unless global LNG demand surges rapidly.

Market Forecast: Bearish Short-Term Outlook

While prices are attempting to stabilize above the $3.361 pivot, weather-driven demand weakness and strong production continue to weigh on sentiment. A break below this level could open the door to $2.995 and even the 200-day moving average. Unless fundamentals shift significantly — particularly via weather or LNG demand — the market bias remains bearish in the near term.

More Information in our Economic Calendar.