Natural Gas News: Market Awaits EIA Storage Report – Will Inventories Tighten Further?

Natural Gas Futures Edge Higher Ahead of EIA Report

U.S. natural gas futures are trading higher on Thursday as market participants anticipate the latest U.S. Energy Information Administration (EIA) weekly storage report, expected at 14:30 GMT. The rise comes amid forecasts of a smaller-than-expected storage build, adding bullish sentiment just two weeks before the start of the winter heating season.

Pre-Winter Storage Tightness and Supply Outlook

Traders are closely watching the upcoming EIA report, with estimates suggesting a storage build of 80 billion cubic feet (Bcf) for the week ending October 11. This figure falls in line with expectations of tightening supply-demand balances as the U.S. prepares for the colder months. A smaller build relative to previous weeks would reflect strengthening demand and could support prices in the near term. Natural Gas Intelligence is giving it a range of 63 to 87 with the 5-year average at 89.

Despite storage levels running above the five-year average, concerns about adequate supply ahead of winter remain a key market driver. With colder weather expected to push up heating demand, the market could face increased volatility if storage levels tighten more than anticipated.

Cold Front Drives Early Demand Surge

Weather conditions are playing a pivotal role in the recent demand surge. According to NatGasWeather, a cold front in the Midwest and Northeast is expected to drive strong natural gas demand over the next two days, with temperatures dipping into the 20s and 30s Fahrenheit. National demand is forecast to remain moderate to high in the short term, bolstered by colder temperatures in key consuming regions. Warmer conditions in the Southwest, where temperatures are expected to stay in the 90s, are providing a counterbalance, helping to temper demand in the southern regions.

However, the 7-15 day forecast indicates milder conditions, which could prevent a prolonged demand spike, potentially limiting near-term upside for natural gas prices.

Technical Indicators and Price Resistance

From a technical standpoint, natural gas prices have faced downside pressure in recent weeks. Futures remain below key resistance levels, with the market still trading near recent lows. The August 28 bottom of $2.201 per MMBtu is being watched as a critical support level. On the upside, resistance is seen between $2.510 and $2.610, with the 50-day moving average positioned at $2.557.

A break above these levels would signal a potential upward move, especially if the EIA storage report shows a tighter supply than expected. However, a larger-than-anticipated build could reinforce bearish momentum, pushing prices lower in the short term.

Market Forecast

In the immediate term, the outlook for natural gas remains cautiously bullish. Traders are focusing on the EIA storage report, which could provide price support if the storage build meets or falls short of the estimated 80 Bcf. Early cold weather patterns are bolstering demand, but with moderate weather on the horizon, any sustained rally may be capped unless there is a sharp increase in heating demand heading into winter. Without stronger demand signals, downside risks remain, with prices vulnerable to further declines if storage builds exceed expectations.