Natural Gas News: Gains Capped as Traders Brace for EIA Data

Natural Gas Futures Dip Ahead of EIA Storage Report

Natural gas futures are trending lower as traders await the weekly storage report from the U.S. Energy Information Administration (EIA). The market is grappling with conflicting factors, balancing high demand forecasts against robust supply and infrastructure challenges.

At 12:25 GMT, Natural Gas Futures are trading $2.739, down $0.006 or -0.22%.

Supply Concerns Cap Gains

Despite intense heat across much of the United States driving demand, futures have not rallied as expected. The July contract expired weakly on Wednesday, with the August contract outlook appearing bearish. Solid production and uncertainty about LNG export volumes are weighing on prices.

Texas Experiences Negative Pricing

In an unusual turn of events, natural gas prices in Texas have dipped into negative territory. At the Waha hub, prices fell to negative $1 per million British thermal units (MMBtu) on Monday. This is the 18th instance of negative pricing in Texas this year, primarily due to infrastructure issues creating temporary oversupply situations.

Weather and Wind Energy Impact

While high temperatures are forecast for much of the southern U.S., increased wind energy production is expected to partially offset demand, particularly in Texas. NatGasWeather predicts “High to Very High demand” for the period from June 27 to July 3.

EIA Storage Report Expectations

The EIA storage report, due at 12:30 GMT, is expected to show a build of around 52 Bcf. Survey averages range between +51-56 Bcf, setting the stage for potential market volatility following the release.

Market Forecast

The outlook for natural gas futures remains bearish. High supply levels and infrastructure maintenance continue to suppress prices despite strong weather-driven demand. Traders should exercise caution, closely monitoring supply chain developments and weather forecasts in this volatile market environment.

Technical Analysis

Natural gas is in a weak position on Thursday after crossing to the bearish side of the 50-day moving average at $2.735. Increased selling pressure could drive the market into a pivot at $2.652, followed by a bottom at $2.625.

Because of the prolonged decrease in terms of price and time, and the EIA report, traders have to be ready for a dramatic closing price reversal bottom. Also on the daily chart, we’re getting very close to “make or break” price levels.