Natural Gas News: Bearish Sentiment to Dominate if EIA Report Meets Forecasts

U.S. Natural Gas Futures Dip Ahead of Key Storage Report

U.S. natural gas futures dipped Thursday as traders awaited the latest Energy Information Administration (EIA) storage report, due at 15:30 GMT. The report is expected to shed light on U.S. natural gas inventory levels, with an injection projected well above the seasonal average, a potentially bearish signal as the market enters a period of mild weather and steady production levels.

Technical Resistance and Support Levels

December futures are currently trading within a narrow range, with key resistance around $2.825. A break above this level could set the stage for a rally toward the $3.044 to $3.053 range, while support on the downside is seen between $2.585 and $2.514. The market’s technical setup reflects caution as traders await a clearer catalyst, either from the storage report or external factors, to push prices decisively in either direction.

Political Landscape Supports Market Sentiment

The recent re-election of former President Donald Trump has bolstered some bullish sentiment, with expectations that his administration’s energy policies could favor oil and gas production. Trump has pledged to reduce regulatory restrictions on fossil fuel producers, which could provide some long-term support for natural gas. Market reaction to Trump’s win initially pushed prices up 7.7 cents on Wednesday, but futures have since pulled back slightly as traders digest these developments in the broader context of supply and demand.

Mild Weather Curbs Near-Term Demand

Forecasts for the Nov 7-13 period indicate milder-than-average conditions across much of the U.S., with cooler weather concentrated in the western and central states. The southern and eastern regions will see warmer temperatures, reducing natural gas heating demand. According to NatGasWeather, overall demand is projected to be light to very light, limiting the likelihood of a weather-driven price spike in the immediate term.

EIA Storage Report Expectations

Today’s EIA report is expected to show a storage build of 64-66 Bcf, well above the five-year average of 32 Bcf. This increase reflects mild weather across much of the U.S. last week and robust wind energy output, which has dampened natural gas demand for power generation. A build close to this range would increase the inventory surplus to over 200 Bcf above the seasonal average, further weighing on prices.

Market Outlook: Bearish

Given ample storage and mild demand, the near-term outlook for natural gas remains bearish. Without a strong catalyst to drive up demand, prices may face continued downward pressure, potentially testing support levels. Traders should monitor today’s EIA report closely, as a larger-than-expected build would likely reinforce a bearish trend.