Natural Gas News: Can Texas Heat Offset a Bearish Storage Report?

September Gas Gives Back Wednesday’s Bounce

The short-covering rally did not survive the contract roll. August natural gas closed higher Wednesday after reaching a three-month low, but that was expiration-day positioning, not a change in conviction. September futures are not holding the bid, and the market is heading into Thursday’s EIA storage report with cooler forecasts still in place across the regions that matter most, production running near record levels and a build expected well above the five-year average.

September natural gas futures are trading $2.706, down $0.016 or 0.59% at 12:10 GMT.

Daily September Natural Gas Futures Technical Analysis

September Natural Gas futures are edging lower on Thursday, shortly before the EIA’s weekly storage report. Yesterday, the market formed a potentially bullish closing price reversal bottom at $2.666. However, we haven’t seen a confirmation yet.

A trade through 2.755 will confirm the chart pattern. This won’t change the trend, but if there is enough volume behind the move, we could see a 2 to 3 day counter-trend rally.

The short-term range is $2.979 to $2.666. If there is follow-through today, then its retracement zone at $2.823 to $2.859 will become the first upside target. New sellers are likely to emerge on a test of this zone since the main trend is down.

A trade through $2.666 will negate the closing price reversal. This could extend the break into the next support level at $2.592.

Texas Cannot Carry the National Balance

The South is still running extreme temperatures with highs across Texas and the Plains reaching the upper 80s through the 110s. Gas-fired generation is elevated where the heat is strongest, and that has kept the market from falling apart entirely.

The Midwest, Great Lakes and Northeast are the problem. Weather systems continue pushing through those regions with showers, thunderstorms and temperatures in the 70s and 80s. The Commodity Weather Group sees normal to below-normal readings across the central and eastern United States through August 7. NatGasWeather still sees high national demand over the next seven days, but the heat is concentrated in the wrong places.

This has been the pattern all summer. Texas delivers, the East cools off, and the national demand number never reaches the level that would force a tighter storage picture. Lower-48 gas demand was 82.2 Bcf per day Wednesday, down 7.2% from a year earlier according to BNEF. That is the number that kills the rally every time it tries to build.

The EIA Build Will Test the Bears’ Confidence

Survey averages point to a 35 to 37 Bcf injection for the week ended July 24, well above the five-year average increase of 26 Bcf. A build in that range tells the market that summer heat is not pulling enough gas from the system and gives sellers confirmation to lean on September futures again.

Last week’s report showed a 32 Bcf build, below the 34 Bcf estimate but above the five-year average of 30 Bcf. Storage sat 6.4% above the five-year seasonal average as of July 17. There is enough gas in the ground to absorb normal summer demand, and the EIA number needs to miss tight to change that.

Production is the other side of the equation. Lower-48 dry gas output was estimated at 112.1 Bcf per day Wednesday, up 3.9% from a year earlier. The EIA raised its 2026 forecast to 111.2 Bcf per day this month from 111.0 in June. Baker Hughes reported rigs rose by one to 127, below February’s three-year high of 134 but enough to keep output steady. The gap between 112 Bcf per day of production and 82 Bcf per day of demand is the reason every rally this summer has attracted sellers.

LNG Holds the Floor but Cannot Tighten the Market

LNG feedgas flows to U.S. export terminals were 18.1 Bcf per day Wednesday, up 2.0% from the prior week. European gas storage entered late July at 56% full against a five-year seasonal average of 72%, and that deficit keeps the continent dependent on U.S. cargoes heading into winter. The export floor is real. It prevents the bearish case from becoming one-sided, but feedgas is holding steady, not accelerating, and steady does not offset record production with a weak weather picture.

What to Watch

The EIA report is the next number that matters. A build near the 35 to 37 Bcf estimate keeps September futures under pressure and confirms that the supply surplus is intact. A tighter print gives buyers something to work with, but it would take a string of smaller builds to change the market’s view that supply is winning.

The weather run is the other catalyst. Bulls need the Midwest and Northeast forecasts to flip hotter before August demand fades. Until those regions hold the heat long enough to produce a broad power-burn surge, the southern heat stays a regional story and sellers keep the advantage. The reversal pattern on the chart gives prices a chance at a short-term bounce, but the bounce needs confirmation and the main trend is still pointing lower.

More Information in our Economic Calendar.