Natural Gas News: $3.238 Sets the Tone as Weekly Follow-Through Hints at Bottom Forming

Natural Gas Weekly Recap: Rally Stalls Below Resistance as Fundamentals Weigh

U.S. natural gas futures posted a modest gain last week, settling at $3.048—up 1.70%—but failed to build momentum above key resistance. The move extended a two-week rally but stopped short of triggering a breakout, as cooling weather forecasts, elevated production, and robust storage levels capped bullish enthusiasm. Traders turned defensive into the weekend, unwilling to chase prices higher without a clear demand catalyst.

Are Cooler Forecasts Undercutting Demand Expectations?

Weather models turned more bearish last week, particularly for the eastern and central U.S., where below-normal temperatures are now forecast from September 10–14. This cooling trend comes at a critical time for late-season power burn and has reduced expectations for sustained air-conditioning demand. Although some warmth lingers in the Mid-South, the broader trend favors lighter load in key consuming regions, pressuring futures and giving bulls little urgency to add length.

Is Production Still Running Too Hot for Bulls to Advance?

Yes. Lower-48 dry gas output remained elevated at 108.2 Bcf/day on Friday, up 5.6% from a year ago. That strength continues to overwhelm demand, which fell to 74.4 Bcf/day, down 3.7% year-over-year. Despite steady LNG feedgas flows near 15.2 Bcf/day, the overall supply-demand balance remains bearish. The EIA’s latest outlook further complicates the picture, raising its 2025 and 2026 production forecasts to 106.44 and 106.09 Bcf/day, respectively—highlighting that supply-side pressure isn’t going away anytime soon.

What Did the Storage Data Reveal About the Market Balance?

Thursday’s EIA report showed a +55 Bcf injection for the week ending August 29, matching consensus expectations but exceeding the five-year average of +36 Bcf. Total storage now stands at 3,272 Bcf, 5.6% above the five-year norm and just 2.2% below last year’s level. This confirms the market remains comfortably supplied as it enters the seasonal transition, reducing the urgency for aggressive buying—even with production volatility in the background.

Can the Market Break Out Without a Fresh Catalyst?

Based on weekly technical analysis, futures closed just below a cluster of 50% resistance levels at $3.238 and $3.598. The market’s inability to push through those levels last week leaves it vulnerable to renewed selling pressure, especially with demand signals softening. Until one of these thresholds is decisively cleared, rallies are likely to face resistance from hedgers and short-term sellers.

Market Forecast: Bearish Unless $3.238 Is Cleared

The near-term outlook turns bearish while prices remain capped below the $3.238 resistance level. Fundamentals—namely strong production, bearish weather, and above-average storage—offer little support for a breakout. Unless demand surprises or supply tightens meaningfully, traders should expect pullbacks toward key support zones to resume next week.

More Information in our Economic Calendar.