Natural Gas News: Can EIA Storage Data Reverse the Downward Trend?

Will Today’s EIA Report Confirm Bearish Sentiment?

The natural gas market faces a critical juncture as traders await today’s EIA storage report, with consensus estimates pointing to a 38 Bcf withdrawal. This anticipated draw comes as prices continue their downward trend, having declined for three consecutive sessions and breaking below significant technical barriers.

At 14:57 GMT, Natural Gas futures are trading $3.113, up $0.070 or +2.30%.

Has Technical Support Already Broken Down?

Natural gas prices have breached the crucial 50-day moving average of $3.133, transforming this level into overhead resistance. The market is currently testing the lower retracement zone between $3.118 and $2.993, with support levels established at $2.762 and $2.588. The breach of these technical levels suggests mounting selling pressure.

How Much Buffer Does Supply Really Provide?

Starting inventories for winter 2024-25 reached 3,922 Bcf, marking the highest level since 2016 and exceeding the five-year average by 6%. Despite injection season showing a 21% decrease from average rates, the robust starting inventory levels have compensated for this shortfall. The South Central region has displayed unusual withdrawal patterns during summer months to meet cooling demand.

Can Weather Patterns Reverse the Bearish Trend?

Short-term forecasts indicate frosty conditions across the Midwest and East through Friday, supporting immediate demand. However, weather models project a warming trend in the following week, weakening the demand outlook. The widespread mild conditions across the West, central, and southern United States have contributed to bearish sentiment.

Where Are Prices Headed Next?

The natural gas market shows increasingly bearish signals ahead of today’s EIA report. The combination of technical weakness, ample supply, and moderating weather patterns suggests continued downward pressure. Short-term price targets focus on the $2.993 support level, with potential for acceleration toward $2.762 if breached. Any bullish reversal would require sustained trading above $3.134, though current market conditions make this scenario unlikely.

The upcoming EIA report could serve as a catalyst for the next significant price move, with particular attention on whether the actual withdrawal matches the expected 38 Bcf draw. A smaller withdrawal could trigger additional selling pressure, while a larger draw might provide temporary support to prices.