Natural Gas News: Technical Levels in Focus as Market Awaits Key EIA Report

Is Natural Gas Poised for a Rebound or a Steeper Sell-Off?

Natural gas futures are hovering near a key technical level, with prices closing in on the 50-day moving average at $2.965. A bullish EIA storage report could spark buying interest, but if prices fail to hold, the selling pressure may drive futures toward the 200-day moving average at $2.693. If that level also gives way, the market could be in for a deeper correction.

Will the EIA Report Deliver the Expected Massive Draw?

Today’s EIA storage report is expected to show a massive withdrawal as it reflects last week’s Arctic blast, which pushed temperatures well below normal across most of the U.S. Analysts anticipate a draw of 310-315 Bcf, far exceeding the five-year average draw of 187 Bcf. Our estimate stands at -313 Bcf, reinforcing expectations of a significant storage decline.

A draw in this range would be one of the largest of the season, but traders will be watching how the market reacts. A failure to rally on bullish data could indicate that demand concerns and milder weather expectations are capping upside potential.

Does Weak Weather-Driven Demand Limit the Upside?

Despite last week’s severe cold, upcoming weather trends suggest a lack of sustained demand. Over the next seven days, light national demand is expected. Chilly conditions will persist in the Great Lakes and Northeast, but temperatures will moderate, with highs in the 20s-30s and lows in the 0s-20s. Meanwhile, a milder system in the South will keep highs in the 40s-50s, while a cold front enters the Pacific Northwest and Northern Rockies this weekend.

With no prolonged deep freezes on the horizon, weather may fail to provide the necessary catalyst for a strong bullish move. Traders should monitor forecast revisions closely for any unexpected cold that could tighten supply-demand balances.

Is Natural Gas Headed for a Sell-Off or a Rebound?

The near-term outlook hinges on today’s EIA storage report and the ability of natural gas futures to hold the $2.965 level. A bullish draw could ignite a short-term rally, but without follow-through buying, prices may struggle to sustain gains. If support at $2.965 fails, a retest of the 200-day moving average at $2.693 is likely. A break below that level would open the door for a steeper sell-off.

For now, the market remains in a technical limbo, waiting for confirmation from storage data and weather trends. If temperatures fail to turn colder, the bearish case strengthens, while a colder-than-expected shift could provide support. Traders should stay alert for rapid moves in either direction.

More Information in our Economic Calendar.