Natural Gas News: Traders Eye 25-29 Bcf Build in Today’s EIA Inventory Report

Natural Gas Futures Rally on Cold Weather Forecasts and Storage Concerns

May Nymex natural gas futures have surged back above the $4 mark, gaining momentum as traders assess colder April weather forecasts and signs of tightening market fundamentals. The upward movement carried through Wednesday into Thursday, with prices finding support above the 50-day moving average at $3.852.

At 12:15 GMT, Natural Gas Futures are trading $4.119, up $0.064 or +1.58%.

Market Technicals and Price Action

Current price action shows natural gas testing major support at $3.924. If this level holds, the market could target minor resistance at $4.094, followed by $4.253. The critical trigger point for a decisive upside breakout sits at $4.317. Conversely, a breakdown below current support could accelerate selling pressure toward $3.732, with further downside risk to the major pivot at $3.350.

Weather Catalysts and Demand Factors

The Commodity Weather Group reports a notable shift to cooler temperatures for the eastern United States from April 7-11, potentially boosting heating demand. This weather pattern emerges as US electricity output shows positive growth trends, with the Edison Electric Institute reporting that total lower-48 electricity output rose 0.9% year-over-year to 72,289 GWh for the week ended March 22, while the 52-week period showed a stronger 3.55% increase.

Supply and Production Metrics

Lower-48 state dry gas production stood at 105 bcf/day (+2.9% y/y) on Wednesday, while domestic demand registered at 74.2 bcf/day (-5.2% y/y). LNG net flows to export terminals were 14.2 bcf/day, down 9.6% week-over-week. The Baker Hughes rig count showed active natural gas drilling rigs increased by 1 to 103 for the week ending March 28, which remains significantly below the 5-1/4 year high of 166 rigs recorded in September 2022.

Storage Outlook and Market Forecast

Thursday’s EIA storage report is projected to show a build of approximately 25-29 Bcf, considerably bearish compared to the five-year average draw of -13 Bcf. Despite this upcoming injection, the broader storage picture remains supportive for prices. Current inventories stand at 1,744 Bcf, which is 557 Bcf below last year and 122 Bcf below the five-year average. BloombergNEF projects US gas storage will run 10% below the five-year average this summer, suggesting sustained price support.

The longer-term outlook appears increasingly bullish as President Trump’s decision to lift restrictions on LNG export projects advances consideration for approximately a dozen new facilities, which would significantly boost demand for US natural gas and provide structural price support.

More Information in our Economic Calendar.