Natural Gas News: Bulls Eye $3.301 Pivot as Heatwave Lifts Demand and Storage Report Looms

Natural Gas Futures Climb as Heatwave Fuels Demand and Shorts Exit Positions

U.S. natural gas futures are trading higher for a third straight session Thursday, extending a rebound from Monday’s multi-month low of $2.895. The rally is being driven by short-covering, hotter weather forecasts, and expectations for a lean weekly storage build. While prices are pushing upward, technical resistance and strong production levels may cap further gains.

At 12:16 GMT, Natural Gas Futures are trading $3.115, up $0.038 or +1.23%.

Can Hotter Forecasts and Rising Demand Push Prices Through Resistance?

September Nymex natural gas settled up 2.23% on Wednesday to $3.075, marking a continued recovery amid expectations for intensifying heat across the U.S. Atmospheric G2 models have revised forecasts warmer for August 11–15 and even more so for the eastern two-thirds of the country through August 20. Elevated temperatures are set to lift power sector demand as air-conditioning loads rise.

The spot market is already responding to the heat, with cash prices climbing and fueling the futures rally. This bullish sentiment, however, is tempered by strong domestic output. BNEF pegged Lower 48 dry gas production at 107.9 Bcf/d on Wednesday, up 5% year-over-year. U.S. electricity demand is also supporting gas usage, with the Edison Electric Institute reporting a 0.9% year-over-year increase in output for the week ending August 2.

Will EIA Storage Data Confirm Bullish Momentum or Weigh on Prices?

Traders are closely eyeing the weekly EIA report due Thursday. The consensus expects a modest 9 Bcf injection for the week ending August 1, well below the 5-year average build of 29 Bcf. If confirmed, this would reinforce bullish sentiment and support prices near current levels.

However, inventory levels remain more than adequate. The previous EIA report showed a 48 Bcf build, above expectations and 5-year averages, keeping total storage 6.7% above seasonal norms. As of July 25, inventories were still 3.9% lower year-over-year but within comfortable margins. Meanwhile, European gas storage is 70% full, slightly lagging its 5-year average of 78%, suggesting global supply remains balanced.

Is Short-Covering Enough to Sustain the Rally?

Technically, the pivot at $3.301 is the next critical resistance. Chart signals suggest growing upside momentum, but the current move appears driven more by short-covering than fresh buying. Unless bulls step in and push prices above $3.301, the rally may lose steam and reverse.

If the level breaks decisively, upside could extend to the 50-day moving average at $3.600. However, with production at two-year highs and storage still healthy, this rally remains vulnerable to a bearish EIA surprise or cooling of weather forecasts.

Outlook: Cautiously Bullish

The short-term outlook leans bullish on weather-driven demand and expectations for a smaller-than-normal storage build. However, strong production and technical resistance at $3.301 could cap upside unless reinforced by solid bullish fundamentals. Traders should watch today’s EIA print and weather models closely for confirmation.

More Information in our Economic Calendar.