Natural Gas News: Bearish Forecast Builds After Cooler Weather and Supply Surge

Natural Gas Drops Sharply as Bearish Supply Data and Cooler Weather Pressure Prices

U.S. natural gas futures are on track to end the week lower, with prices tumbling below key technical levels on Friday. The October contract broke through the 50% and 61.8% short-term retracement levels at $2.947 and $2.887, respectively, and pierced last week’s swing bottom at $2.869.

Earlier in the week, the 50-day moving average at $3.110 proved to be strong resistance. With price momentum now to the downside, traders are eyeing the $2.695–$2.647 zone as the next key support.

At 17:10 GMT, Natural Gas Futures are trading $2.883, down $0.056 or -1.91%.

EIA Inventory Build Surprises to the Upside—Is Oversupply Back in Focus?

The weekly EIA report delivered a bearish shock to the market on Thursday, showing a +90 Bcf build in natural gas inventories for the week ending September 12.

This figure not only exceeded expectations of +81 Bcf but also dwarfed the five-year average build of +74 Bcf for this time of year. As of that date, storage levels were 6.3% above the five-year average, despite being 0.3% lower year-over-year—suggesting more than adequate supply heading into fall.

Cooler Forecasts Slash Near-Term Demand from Power Sector

Cooling temperatures are compounding the bearish pressure. Forecasts from Atmospheric G2 show a significant cooldown across the central and eastern U.S. from September 23 through early October.

That’s expected to sharply reduce power burn demand as air conditioning usage falls, further loosening the near-term balance. Lower-48 state gas demand stood at 74.0 Bcf/day on Thursday, down 0.8% year-over-year, according to BloombergNEF.

Production Stays Elevated While LNG Exports Hold Steady

Production remains near record highs. Dry gas output on Thursday hit 107.2 Bcf/day—up 5.7% from a year ago—while active drilling rigs remain historically high.

The EIA recently increased its 2025 production forecast to 106.63 Bcf/day. LNG exports continue to offer support, with net flows to U.S. terminals at 15.4 Bcf/day, up 5.6% week-over-week. However, even strong LNG demand isn’t enough to offset weak domestic consumption and surging supply.

Will Prices Find a Floor or Keep Sliding?

Technically, the path of least resistance is lower. Unless bulls reclaim the $2.947 level, price action favors further downside into the $2.695–$2.647 range.

A short-covering bounce is possible if prices recover that level, but any rally will likely stall below the 50-day moving average near $3.110.

With fundamentals pointing to softening demand, strong production, and high inventories, the near-term outlook remains bearish.

More Information in our Economic Calendar.