Natural Gas News: Cooler Weather Boosts Futures, Resistance Levels in Focus Today

Natural Gas Futures Edge Higher on Cooler Weather Outlook

Natural gas futures rose on Wednesday, buoyed by forecasts signaling colder weather across parts of the U.S. next week. This has supported expectations for a tightening supply-demand balance, especially with production remaining near the 100 Bcf/d mark due to ongoing curtailments. The market’s technical activity showed strong upward movement, although resistance levels capped further gains.

At 18:05 GMT, Natural Gas futures are trading $2.901, up $0.005 or +0.17%.

Technical Resistance Stalls Further Gains

The natural gas market surged to $3.00, the highest level since July 1, but struggled to break through key resistance levels. The major retracement zone, ranging from $2.937 to $3.110, prevented a sustained rally. Additionally, traders attempted to surpass the 200-day moving average (MA) at $2.969, but the market was unable to maintain momentum above this critical level.

The 200-day MA, along with the retracement zone, is expected to remain a focal point for traders in the coming sessions. On the downside, minor support rests at $2.825, but a failure to hold this level could trigger a steeper decline towards $2.702, unless “buy-the-dip” behavior emerges among traders.

Weather Outlook Adds Demand, But Remains Soft

Weather forecasts from NatGasWeather indicated cooler trends, with both American and European models adding four heating degree days (HDD) to demand forecasts. However, heating demand is still expected to remain below normal over the next 15 days, as the majority of the U.S. will experience mild temperatures. Highs of 60°F to 80°F are expected across most regions, with hotter conditions in California and parts of the southern U.S.

While temperatures will generally be comfortable, limited heating and cooling needs will keep natural gas demand low to very low over the next seven days. However, despite the low temperature-driven demand, tight supply conditions are expected to reduce natural gas surpluses.

EIA Storage Reports Expected to Show Smaller Builds

Due to the tighter supply-demand balance, upcoming storage reports from the U.S. Energy Information Administration (EIA) are expected to reflect smaller-than-average injections. The reduced builds could shrink the surplus in natural gas inventories, currently estimated at around 150 Bcf above the five-year average. This tightening trend may offer support to prices in the coming weeks.

Market Forecast

The natural gas market is poised for further volatility, with short-term price action likely hinging on weather developments and supply constraints. Despite weak near-term demand, tight supply conditions may continue to support prices. A bullish outlook remains likely if technical resistance is breached, but downside risks persist if support levels fail to hold, particularly around $2.825.