Natural Gas News: Futures Plunge Below Key Support Amid Rising Inventory Concerns

Natural Gas Futures: Bearish Momentum Intensifies as Storage Concerns Mount

U.S. natural gas futures are under pressure early Monday, continuing last week’s downward trend. With weather-driven demand fading, bearish sentiment is growing stronger, pushing prices further down. The market opened the week below critical technical levels, and as storage concerns mount, traders are increasingly skeptical about the prospects for a significant rebound.

At 12:04 GMT, Natural Gas futures are trading $1.960, down $0.062 or -3.07%.

Technical Weakness and Bearish Pressure

Natural gas futures are decisively trading below both the 50-day and 200-day moving averages, emboldening short-sellers. The current environment is particularly harsh for long positions, as bears target the recent low of $1.882, with potential to push even lower if selling pressure continues. Some market participants are eyeing targets as low as $1.60 or $1.48 if current conditions persist. Despite the bearish sentiment, producers may soon consider cutting production to balance the market, as they did earlier this year, especially if prices continue to slide.

Last Week’s Performance

Last week was marked by volatility, with natural gas futures ending the week down 4.76%. The market struggled with shifting weather patterns, which reduced demand expectations, and faced strong technical resistance. After opening the week with hopes of higher demand due to hot weather in key U.S. regions, forecasts shifted towards milder conditions, particularly in the Northeast and Midwest, dampening market sentiment. By week’s end, natural gas settled at $2.022, falling below critical support levels and raising concerns of further declines.

Storage and Supply Concerns

A key driver of last week’s bearish trend was the higher-than-expected build in natural gas storage. The Energy Information Administration (EIA) reported an injection of 35 billion cubic feet (Bcf) for the week ending August 16, surpassing expectations and intensifying fears of a supply glut as the market approaches the shoulder season. Despite production cutbacks from major players like EQT and Coterra Energy, oversupply concerns persist, particularly with lower 48 states’ production still hovering around 101 Bcf/day. The recovery in LNG exports, following disruptions from Hurricane Beryl, adds another layer of complexity to the supply-demand balance.

Market Outlook

The outlook for natural gas remains bearish in the near term. With summer demand waning and storage levels high, prices are likely to struggle. Potential late-summer heat waves could provide temporary support, but any significant price recovery is unlikely before the winter heating season. Traders should monitor upcoming EIA storage reports, weather forecasts, and global demand trends for any signs of a shift in market trends. For now, the market remains vulnerable to further declines, with $1.882 serving as a key support level that could trigger additional selling if breached.