Natural Gas News: Will Technical Weakness Push Natural Gas Futures Below Critical $2.201 Support?

Bearish Momentum Deepens Amid Mild Weather and Weak Demand

U.S. natural gas prices faced a difficult week, extending their downtrend as mild weather forecasts continued to cap demand. Futures closed Friday on a bearish note, pressured by weak fundamentals and technical breakdowns. Despite occasional rallies, the market sentiment remained heavily tilted toward the downside.

Last week, Natural Gas Futures settled at $2.258, down $0.374 or -14.21%.

Mild Weather Cuts into Demand

The key factor driving the continued decline in natural gas prices was the unexpectedly warm weather across much of the United States. Forecasts for October showed mild temperatures, with highs in the 60s and 80s across most regions, limiting the need for heating. Only areas near the Canadian border experienced cooler conditions, briefly spurring demand in the Midwest and Northeast. However, the mild temperatures in southern regions, especially in Texas and the Southwest, kept overall national demand weak​​.

This weather factor had traders focused on selling into short-lived rallies. Resistance at $2.610 remained a significant technical level, with both the 50-day and 200-day moving averages well above current price levels​.

Hurricane Milton’s Demand Destruction

Adding to the bearish trend earlier in the week was Hurricane Milton, which disrupted natural gas markets. The Category 4 storm knocked out power to millions of homes and businesses in Florida, a major consumer of natural gas for electricity generation. Although the hurricane did not impact production areas in the Gulf of Mexico, the sharp reduction in demand weighed heavily on prices​.

As power was restored, prices attempted to stabilize, but the overall supply-demand balance remained unfavorable for any sustained price recovery. Traders responded with short-covering and profit-taking toward the end of the week as cooler temperatures briefly boosted demand​​.

Storage Levels Add to Pressure

Further weighing on the market, the latest U.S. Energy Information Administration (EIA) storage report showed an injection of 76 billion cubic feet (Bcf) for the week ending October 11. While this was slightly below seasonal norms, it still pushed the total working gas in storage to 3,705 Bcf—107 Bcf higher than last year and 163 Bcf above the five-year average​. These elevated storage levels limited any upside potential, reinforcing the bearish tone despite the impending winter heating season.

Near-Term Outlook: Bearish with Downside Risk

Looking ahead, the outlook for natural gas remains bearish as mild weather is expected to persist through the remainder of October​. The market is likely to test the key support level at $2.201. If it fails, the selling pressure could extend into $1.882 over the near-term.

While colder temperatures in northern regions may spur some short-term demand, overall market conditions appear unfavorable for a sustained rally unless there is a significant shift in weather patterns or unexpected supply disruptions.

Traders should be prepared for further volatility, especially if the next EIA storage report shows another large build, keeping the market under bearish pressure.