Natural Gas News: 3.636 Sets the Tone as Market Awaits EIA and Weather Data This Week

Natural Gas Futures Slide as EIA Storage Surges

Natural gas futures faced sharp selling last week, closing at $3.739/MMBtu, down 6.76% as a heavy EIA storage injection and moderating weather forecasts outweighed firm power demand. Traders are recalibrating summer expectations as storage builds accelerate, production remains robust, and near-term weather outlooks soften the bull case for August.

Will EIA Storage Builds Keep Pressure on Natural Gas?

A larger-than-expected 96 Bcf storage injection reported June 26 pushed prices sharply lower, far exceeding the 88 Bcf consensus and widening the surplus over the five-year average. Inventories climbed to 2,898 Bcf, pushing July futures from $3.989/MMBtu to $3.406/MMBtu before August took the lead.

Injection rates are running 28% above the five-year average this season, with EIA modeling projecting inventories could reach 3,932 Bcf by October if this pace holds. This aggressive refill trajectory is limiting upside for futures, even with higher power burns during the heat.

Can Summer Weather and Power Demand Rescue the Bull Case?

Record-breaking Northeast heat, including Boston hitting 102°F, drove a 14.7% increase in gas-for-power demand week-over-week, briefly boosting Algonquin Citygate cash prices to $6.75/MMBtu before retreating to $2.61/MMBtu.

However, weather models diverged late in the week, with American forecasts trending cooler across the Midwest while European models held hotter. This inconsistency injected further caution among traders, questioning whether heat-driven demand will remain robust enough to dent the supply overhang.

LNG Exports and Production Trends: Is the Supply Overhang at Risk?

Dry gas production averaged 106.0 Bcf/d last week, up 0.3%, despite continued rig count declines, showing producers’ resilience and delaying meaningful supply tightening.

LNG exports remained steady, with 14.9 Bcf/d of feedgas demand and 30 LNG vessels departing, but maintenance and outages have kept export demand below April’s highs. While LNG facilities are expected to ramp feedgas demand toward 15-16 Bcf/d, the current pace has not offset the strong supply picture.

Market Forecast: Further Downside Before Stability?

The near-term direction of natural gas futures is likely to be determined by trader reaction to the 52-week moving average at $3.636. Bullish traders are eyeing $4.047, bearish traders will be watching for a retest of last week’s low at $3.403.

Traders should prepare for increased volatility during the upcoming EIA data blackout over the July 4th holiday, with the delayed two-week storage report on July 10 set to be a significant catalyst.

The market remains locked in a battle between strong summer demand and a robust supply overhang, keeping the near-term bias cautious while maintaining upside potential on any supply or weather-driven surprises.

More Information in our Economic Calendar.