Natural Gas News: Bullish Momentum Continues with Tight Supply, Low Inventory Report

Natural Gas Futures Edge Higher on Bullish Storage Data and Tight Supply

Natural gas futures are advancing on Friday, positioning the market for its fourth consecutive daily gain. After stabilizing around the $1.90 level, the market has regained momentum, breaking above a previous minor top at $2.149. Should this upward movement continue, traders could push prices toward the next resistance at $2.315.

At 13:32 GMT, Natural Gas Futures are trading $2.163, up $0.036 or +1.69%.

EIA Reports Smaller-Than-Expected Storage Build

The U.S. Energy Information Administration (EIA) reported a storage increase of 21 billion cubic feet (Bcf) for the week ending August 2, 2024. This figure fell short of market expectations, which had predicted a build of 25-27 Bcf. The lower-than-anticipated storage increase signals a tightening supply, which has provided support for the ongoing price recovery. Current storage levels stand at 3,270 Bcf, 248 Bcf higher than this time last year and 424 Bcf above the five-year average.

Production Steady as Cooler Weather Conditions Emerge

Natural gas production remains stable at around 100.6 Bcf per day. Meanwhile, the National Weather Service (NWS) forecasts cooler weather across northern markets into early next week, potentially reducing short-term demand. Additionally, the remnants of Hurricane Debby are bringing heavy rain to the East Coast, which could further temper immediate energy consumption. However, an expected heatwave may offset these effects and drive demand higher in the near term.

Bargain Buying Lifts Prices After Recent Selloff

The recent uptick in natural gas futures has also been driven by bargain buying. After a period of selling pressure that pushed prices lower, traders are seizing the opportunity to buy at reduced levels. This has bolstered the market, helping it to recover from recent lows associated with concerns about a potential economic downturn.

Market Forecast: Bullish Momentum Likely to Persist

Given the current market conditions, the outlook for natural gas prices remains bullish. The combination of a smaller storage build, steady production, and renewed buying interest suggests that prices could continue to rise. Traders should monitor the $2.315 level as the next potential resistance point, with further gains possible if supportive factors remain in place.

Technical Analysis

Natural gas futures are expected to meet headwinds at $2.149. Overcoming this level with increased volume could eventually lead to a test of the next minor top at $2.315.

The inability to overcome $2.149 will be a sign of renewed selling pressure. The could fuel a retreat into a minor pivot at $2.034.