Natural Gas News: All Eyes on EIA Inventory as Bulls Target $4.186 in Futures Market

Natural Gas Surges as Technical Breakout and Heatwaves Fuel Bullish Sentiment

U.S. natural gas futures climbed sharply on Wednesday morning, extending a multi-day rally ahead of the latest EIA storage report. July contracts breached key resistance levels at $3.817, $3.832, and $3.859, and with momentum building above the 50-day moving average of $3.700, traders are now eyeing a potential test of the $4.186 level.

Is Weather-Driven Demand Strong Enough to Sustain the Rally?

Hotter temperatures across the southern and eastern U.S. are driving short-term demand expectations higher. Forecasts from NatGasWeather call for widespread 80s to 100s in two-thirds of the country through early next week, underpinning national demand. A ridge of high pressure is expected to dominate the East, pushing temperatures well above seasonal norms and spurring cooling demand.

Yet the West is set to moderate, potentially capping gains. Weather-driven demand is clearly boosting bullish sentiment in the short term, but gains may hinge on whether elevated temperatures persist beyond the current forecast window.

Will the EIA Storage Report Inject Volatility?

Traders are bracing for potential volatility with the release of Wednesday’s EIA storage report. Market consensus points to an injection between +96 and +98 Bcf, well above the five-year average build of +72 Bcf. A +97 Bcf injection would mark the eighth consecutive week of above-normal builds.

A print above +100 Bcf would reinforce concerns over persistent oversupply and challenge the recent rally, while a smaller-than-expected build could offer bulls another leg higher.

Does Surging Supply Undermine the Bullish Case?

Despite the rally, structural headwinds remain. Last week’s storage data showed a 109 Bcf build—far exceeding the seasonal norm—and inventories now sit 5.4% above five-year averages. Daily production continues to hover near 105 Bcf, while power sector demand is trailing last year’s levels. These imbalances suggest that the market remains fundamentally oversupplied, limiting the scope for a sustained move higher unless weather-induced demand intensifies significantly.

Market Forecast: Bullish Short-Term, Cautious Beyond Weather Tailwinds

With technicals aligned and heat-driven demand surging, near-term momentum remains bullish. Prices are poised to test $4.186 if today’s storage report is neutral or supportive. However, the longer-term view remains cautious due to persistent supply-side pressure. Traders should watch storage and production trends closely, as any bullish weather surprise may be quickly offset by underlying fundamentals.

More Information in our Economic Calendar.