Natural Gas News: Bearish Forecast on Milder Weather and Robust Storage Levels

Natural Gas Futures Sink as Supply, Storage Overhangs Market

Natural gas futures ended last week under pressure, with the front-month contract settling at $2.990, down 3.02% on the week. Early buying tied to scorching weather in parts of the U.S. faded quickly as traders turned their attention to strong production, robust storage levels, and forecasts for milder conditions ahead. The technical picture remains firmly bearish, with price holding well below the 52-week simple moving average at 3.730.

Storage Build Signals Comfortable Supply Cushion

The latest EIA storage report showed a net injection of 7 Bcf for the week ending August 1, bringing total working gas in storage to 3,130 Bcf. That’s 173 Bcf above the five-year average and comfortably within the historical range. Stocks remain 137 Bcf below last year, but the surplus versus seasonal norms is enough to dampen urgency in the market. The largest regional change came from the South Central, where salt storage dropped 20 Bcf, offset by smaller gains elsewhere.

Weather Premium Fades as Demand Outlook Softens

While early forecasts suggested strong cooling demand from heat in the central and southern U.S., updated models shifted toward milder conditions in key demand hubs. Traders also eyed potential tropical activity that could disrupt consumption patterns more than supply. With record output still in play and storage sitting above the seasonal average, speculative long positions have been met with consistent selling pressure.

Technical Levels Offer Little Immediate Support

From a chart perspective, the downtrend is intact. The first significant resistance is the 52-week SMA at 3.730, and reclaiming that level would be necessary to turn sentiment less bearish. On the downside, the next major support sits far below at 2.574. The absence of intermediate support levels between current pricing and that floor leaves the market vulnerable to further declines if selling accelerates.

Market Forecast – Bias Remains to the Downside

Unless weather models pivot back toward sustained heat or a supply disruption occurs, the short-term bias remains bearish. With storage comfortably above the five-year norm and production strong, rallies toward 3.301 are likely to face selling. A break below 2.895 could open the door for a test of 2.574. Traders should remain cautious on long positions unless the market can close decisively above 3.730.

More Information in our Natural gas futures.