Natural Gas News: Bearish Sentiment Builds as Inventory and Weather Pressure Prices

Futures Slide on Warmer Weather and High Supply Levels

Natural gas futures declined sharply on Monday, trading near $3.216, down 4.37% intraday. Prices tested the 50-day moving average of $3.148, which held as support, but bullish momentum remains capped following last week’s failure to breach resistance near $3.397. Warmer mid-December weather forecasts have reversed some of the gains driven by colder trends last week, while ample storage levels continue to weigh on market sentiment.

Resistance Levels Cap Upside

Last week, traders attempted to push prices above the 200-day moving average at $3.397, but this level, along with the pivot at $3.444, acted as significant resistance. Further upside remains challenging, with additional resistance at last month’s highs of $3.637 and $3.647. For any sustained rally, natural gas prices must break decisively above these levels.

Support Levels in Focus

On the downside, the 50-day moving average at $3.148 remains a critical support level. If this level fails, natural gas prices could quickly test $3.118. A breach below $3.118 risks accelerating the selloff toward $2.993, with a deeper decline possible if bearish fundamentals persist.

High Storage Levels Pressure Prices

Supply fundamentals are adding to bearish sentiment. According to the EIA, working gas in storage was 3,967 Bcf as of November 22, 2024. While inventories fell by 2 Bcf from the prior week, they remain 267 Bcf above the five-year average of 3,700 Bcf and 134 Bcf higher than the same period last year. Current storage levels are above the historical range, signaling abundant supply, which limits upward price movement even during periods of high demand.

Weather Updates Weigh on Demand Outlook

Natural gas prices initially rallied late last week on forecasts for colder weather, but updated models indicate warmer-than-expected temperatures for mid-December. From December 13-16, much of the U.S. is expected to experience near or above-normal temperatures, except for colder conditions in the Northern Rockies and Plains. High demand is forecasted for the current week due to freezing conditions across the Midwest and East, but milder weather in the West offsets the outlook.

Market Forecast

Natural gas futures face a bearish short-term outlook, with warmer mid-December forecasts and elevated storage levels pressuring prices. While demand this week remains strong, failure to hold the $3.148 support level could lead to further downside, targeting $2.993. Weather forecasts and supply reports will be key for traders navigating near-term price action.

More Information in our Economic Calendar.