Natural Gas News: Bearish Market Sentiment Follows EIA Inventory Report

Natural Gas Slides as EIA Data Confirms Ample Supplies

U.S. natural gas futures fell sharply on Thursday in the last full trading session before the July 4 Independence Day holiday, with U.S. markets effectively closed on Friday. Traders digested a bearish EIA storage report that confirmed inventories remain comfortably above seasonal norms despite rising summer cooling demand and warmer forecasts.

Why Did Natural Gas Drop on Thursday

August Nymex natural gas (NGQ25) settled down by 2.26%, or -$0.079, after the EIA reported a +55 Bcf injection for the week ending June 27, exceeding expectations of +49 Bcf even as it came in below the five-year average build of +61 Bcf. This pushed total stocks to 6.2% above the five-year average, reinforcing that supplies are adequate heading into the core of summer demand season.

The bearish tone was underlined by strong lower-48 dry gas production, which held at 107.4 Bcf/day, up 3.3% year-on-year, while demand was notably soft at 74.0 Bcf/day, down 5.4% from a year ago. This imbalance between resilient supply and tepid demand limited the market’s ability to respond to supportive weather signals and kept upward momentum capped.

Can Warmer Weather Offset Bearish Storage Data

Despite the bearish EIA report, traders are watching weather models closely. Vaisala forecasts indicate above-normal temperatures across the West for July 8-12, with a shift toward warmer conditions in the eastern half of the U.S. for July 13-17, potentially boosting power sector demand.

The Edison Electric Institute reported that lower-48 electricity output rose 3.2% year-on-year for the week ending June 28, indicating robust cooling demand potential during peak summer heat.

LNG flows to U.S. export terminals held steady at 15.0 Bcf/day, up 0.2% week-on-week, adding a stable demand pillar. However, Europe’s gas storage levels remain 59% full compared to the five-year seasonal average of 68%, limiting immediate export-driven bullish impulses in the near term.

What Does This Mean for Traders Next Week

Natural gas rejected levels near $3.574 on Thursday, drifting back toward support near $3.293, indicating the market remains technically vulnerable. The 50-day and 200-day moving averages remain above current price levels, limiting upside unless hotter weather triggers sustained demand tightening.

Short-term forecast: the outlook remains bearish, with a potential test of $3.293 support unless persistent heat across the Midwest and East lifts cooling demand meaningfully. A decisive move above $3.574 would be needed to consider a neutral to mildly bullish shift in the near term.

Traders should focus on updated weather runs, daily production data, and LNG flows for any signs of a tightening balance. For now, resilient production and ample storage are keeping natural gas under pressure, capping upside potential heading into the next full trading week.

More Information in our Economic Calendar.