Natural Gas News: Traders Eye Potential Support at $2.201 as Mild Weather Weighs

Natural Gas Futures Edge Higher, But Bearish Sentiment Prevails

U.S. natural gas futures showed slight gains on Monday, following a near-test of the August 28 bottom at $2.201. The intraday low was recorded at $2.210, suggesting the possibility of a reversal pattern. However, traders remain cautious, as the upward move is expected to be driven more by profit-taking than fresh buying pressure. Resistance is anticipated in the retracement zone between $2.510 and $2.610, with the 50-day moving average standing at $2.548.

At 13:08 GMT, natural gas futures are trading $2.294, up $0.036 or +1.59%.

Mild Weather Continues to Weaken Demand

Mild weather forecasts across much of the U.S. are weighing on natural gas demand. October has brought higher-than-average temperatures in many regions, reducing the need for heating. Most areas are seeing highs in the 60s to 80s, particularly in southern states like Texas, where cooling demand has also tapered off. Only parts of the Midwest and Northeast are experiencing cooler temperatures that could stimulate some localized demand, but overall consumption remains weak.

With such mild conditions expected to persist, traders are increasingly selling into short-lived rallies, contributing to downward price pressure. As long as the mild weather outlook holds, significant demand recovery seems unlikely, keeping natural gas futures under bearish control.

Storage Levels Apply Additional Pressure

Natural gas prices face further downside pressure due to elevated storage levels. The latest report from the U.S. Energy Information Administration (EIA) revealed an injection of 76 billion cubic feet (Bcf) for the week ending October 11. Total working gas in storage now sits at 3,705 Bcf, which is 107 Bcf higher than last year and 163 Bcf above the five-year average.

These elevated storage figures continue to suppress any upward momentum, reinforcing the bearish sentiment in the market, even as the winter heating season approaches.

Market Forecast: Bearish Outlook Ahead

Looking forward, natural gas futures are likely to remain under pressure. The mild weather forecast and elevated storage levels point to continued weak demand. The market is expected to test key support at $2.201, with the potential for prices to drop further to $1.882 if that level breaks. Barring any significant changes in weather or unexpected disruptions in supply, traders should brace for continued bearish momentum in the near term.