Natural Gas News: Bearish Market Tone as Chart Support at $2.885 Comes Into Focus

Natural Gas Futures Slip Below Key Support as Supply Growth Pressures Bulls

U.S. natural gas futures extended their slide early Wednesday, with the September Nymex contract breaching Monday’s low of $3.062 and turning attention toward long-term support at $2.885.

While hot weather in the short term had sparked a brief rally on Tuesday, faltering demand expectations and surging production weighed on sentiment. The pivot resistance has now lowered to $3.367, signaling near-term bearish control.

At 14:08 GMT, Natural Gas futures are trading $3.033, down $0.109 or -3.47%.

Can Heat Forecasts Outweigh Weakening U.S. Gas Demand?

After a weather-driven rebound on Tuesday, the front-month contract failed to sustain momentum as cooler temperatures are expected to spread across much of the country later this week. NatGasWeather reported that national demand is set to ease to moderate levels with highs in the 70s and 80s dominating through early next week, limiting the need for elevated power burn.

However, forecasts remain mixed. Vaisala projected hotter-than-average temperatures returning to both coasts between August 8–12, which could support natural gas demand from utilities managing increased air-conditioning loads. Traders will be watching whether that window of heat materializes strongly enough to revive upside interest.

Production Rises as Drilling Activity Accelerates

Fundamental pressure continues from the supply side. BNEF data showed that dry gas production in the Lower 48 reached 108.1 Bcf/day on Tuesday—up 3.2% year-over-year. U.S. drilling activity is also gaining traction, with Baker Hughes reporting a rise of five gas rigs last week to 122, the highest since 2023 and up from the September low of 94.

Despite the uptick in demand—Tuesday’s Lower 48 gas demand stood at 86.0 Bcf/day, up 7.1% y/y—storage remains adequate. The EIA’s most recent report showed an injection of just 23 Bcf, lower than consensus and historical averages. Yet inventories are still 5.9% above the 5-year average, offering a cushion against short-term supply risks.

Will LNG Exports and Power Demand Offer Support?

LNG exports have been relatively stable, with flows to U.S. terminals at 15.3 Bcf/day, up 2.6% week-on-week. Meanwhile, electricity output also continues to rise, a supportive factor for natural gas demand. According to the Edison Electric Institute, output for the week ended July 19 rose 2.1% y/y, reflecting ongoing summer power load.

Market Forecast: Bearish Until Support Proves Durable

The near-term bias leans bearish, with softening demand expectations and rising production pressuring prices below critical support. Unless the forecasted early August heat wave delivers a significant demand spike, futures may test the $2.885 level. Traders should monitor weather updates closely, but for now, any upside looks limited without a stronger catalyst.

More Information in our Economic Calendar.