Natural Gas News: Mild Forecast and Inventory Surge Challenge Bullish Rebound

Natural Gas Futures Edge Lower as Bearish EIA Report Weighs on Market

Natural gas futures fell slightly on Friday, easing from a recent spike to $2.582 in the previous session. Traders are assessing technical indicators alongside a bearish U.S. Energy Information Administration (EIA) storage report, which revealed higher-than-expected injections into U.S. gas storage. Market technicals show current resistance at the 50-day moving average of $2.537, with potential for further downward movement if prices break lower.

At 14:42 GMT, Natural Gas futures are trading $2.491, down $0.031 or -1.23%.

EIA Storage Injection Overshoots Expectations

The EIA reported an injection of 80 billion cubic feet (Bcf) for the week ending October 18, bringing total working gas in storage to 3,785 Bcf. This injection was significantly above analyst expectations and the five-year average, putting pressure on market sentiment. Stocks are now 106 Bcf above levels at this time last year and 167 Bcf above the five-year average of 3,618 Bcf. This data points to a comfortable storage buffer heading into winter, limiting bullish sentiment and heightening the need for stronger demand indicators.

Supply Holds Steady, Demand Slips

On the supply side, total U.S. natural gas production remained largely stable at 101.5 Bcf per day (Bcf/d) over the past week, with a minor 0.9% dip due to reduced imports from Canada, which fell by 14.9% week-over-week. Meanwhile, total U.S. natural gas consumption decreased by 4.3% week-over-week, with power generation demand down by 5.7% and residential and commercial consumption dropping 7.1%. LNG exports remained constant, averaging 13.7 Bcf/d, suggesting that while export demand holds steady, it is insufficient to absorb rising supply levels in domestic storage.

LNG Export Activity Stable

Liquefied natural gas (LNG) exports provided some support, with 27 LNG vessels departing U.S. terminals between October 17 and October 23, carrying a total of 101 Bcf in gas capacity. Export terminals in Louisiana saw minor declines in deliveries, offset by small increases outside the Gulf Coast region. With global LNG demand steady, U.S. exports remain a key balancing factor for domestic supply, though current levels may be insufficient to drive a bullish shift in the market absent stronger demand from colder weather.

Rig Count Falls, Weather Remains Mild

Baker Hughes reported a decline in the natural gas rig count, which fell by two to 99 rigs for the week ending October 15. The drop highlights a continued reduction in drilling activity, especially in the Haynesville region. Weather forecasts from NatGasWeather indicate light demand in the immediate term, with mild temperatures prevailing across most of the U.S. through early November. Cooler conditions could arrive in the Northeast by mid-November, which could spur demand; however, these colder trends are not yet firmly in place.

Market Forecast

Natural gas markets are currently showing a bearish outlook, with technical and fundamental pressures building. While traders may watch for a move up to the $2.615-$2.710 retracement zone, significant resistance at the 50-day moving average could cap gains. Without a confirmed drop in temperatures, continued high storage levels and weaker demand suggest further downside risk in the near term, potentially driving prices toward the support level of $2.396.