Natural Gas News: Bullish Setup Builds on Cool Forecasts, LNG Demand, and Tight Storage

Natural Gas Slips as Rally Stalls Near Resistance, Traders Eye Shifting Weather and Storage Trends

U.S. natural gas futures pulled back early Tuesday as traders locked in gains from Monday’s weather-driven rally. The May contract, which had climbed nearly 20 cents over the previous two sessions on cooler temperature forecasts and strong LNG demand, encountered resistance near the $4.317 level—a key 50% retracement from its short-term range.

At 13:18 GMT, Natural Gas Futures are trading $4.050, down $0.069 or -1.68%.

Is Technical Resistance Capping the Rally?

Technically, the short-term trend remains down, but bullish momentum emerged last week with a closing price reversal on March 27. Monday’s gap higher briefly lifted prices to a one-week high, but the rally stalled just below the 50% retracement level of $4.317, triggering profit-taking. Support levels to watch include a minor pivot at $3.924 and the 50-day moving average at $3.830, which remains a critical level for bulls.

How Are Weather and Storage Data Impacting Sentiment?

Forecast revisions continue to influence near-term sentiment. Atmospheric G2 called for significantly cooler conditions across the eastern two-thirds of the U.S. for April 5–9, boosting heating demand expectations. However, NatGasWeather’s outlook points to only moderate to low national demand through April 6, with warmer temperatures dominating the South and East before another cold shot targets the Midwest and Northeast April 7–9.

On the storage front, last week’s EIA report showed a surprise +37 Bcf injection, exceeding expectations and counter to the five-year average draw of -31 Bcf. While this initially pressured prices, total inventories remain tight—down 24% year-over-year and 6.5% below the five-year seasonal average—reinforcing longer-term supply concerns.

Is LNG Export Demand Supporting the Market?

Robust LNG demand continues to underpin the market. LNG net flows to U.S. export terminals reached 15.5 Bcf/d on Monday, up 8.9% week-over-week. Additionally, the recent lift of the U.S. pause on LNG export project approvals is expected to accelerate the expansion of export capacity, tightening domestic supply further over time.

Dry gas production on Monday stood at 107.1 Bcf/d, up 3.9% year-over-year, while demand was 74.2 Bcf/d, down 1.0% year-over-year, per BNEF data. Electricity demand remains firm, with lower-48 generation rising 0.9% year-over-year for the week ending March 22.

Market Forecast: Bullish with Resistance in Focus

While Tuesday’s pullback reflects short-term profit-taking and proximity to technical resistance, fundamentals remain broadly supportive. Continued strength in LNG exports, cooler forecasts for early April, and tight storage relative to norms suggest a bullish short-term outlook. A breakout above $4.317 could open the door for further gains, but traders should watch for resistance-driven consolidation in the near term.

More Information in our Economic Calendar.