Natural Gas News: Can the 200-Day Moving Average Hold as Weather Cools Demand?

Natural Gas Prices Struggle Near Key Support as Weather Cools Demand

U.S. natural gas futures remain under pressure this week, testing key technical support levels as supply continues to build and weather-driven demand stays weak. Traders are now watching for a potential bounce from the 200-day moving average, a key indicator of long-term trend direction, currently sitting at $2.902. However, with no strong fundamental catalyst in sight, any short-term recovery may be limited.

At 11:53 GMT, Natural Gas Futures are trading $3.036, up $0.029 or +0.96%.

Is Technical Support Enough to Halt the Slide?

Natural gas futures have seen six consecutive sessions of lower lows, slipping to a five-month low on Tuesday. Price action is now centered around the 61.8% retracement level at $2.995, which has held for three sessions. More importantly, the 200-day moving average at $2.902 is seen as the final line of defense before a potential drop toward $2.199. Without fresh buying or profit-taking, traders may struggle to hold this level, especially as the market lacks supportive fundamentals.

Warm Weather Erodes Demand, Pressures Inventories

Forecasts from the Commodity Weather Group suggest continued warmer-than-normal temperatures across the Midwest and East through early May. This pattern has sharply reduced heating demand, translating into lower consumption levels. On Tuesday, Lower-48 gas demand dropped to 66.1 bcf/day, down 5.2% year-over-year, while production remains high at 104.9 bcf/day. Storage injections are beginning to reflect the imbalance—last week’s EIA report showed a smaller-than-expected build of +16 bcf, but demand remains too light to absorb current supply levels.

Power Sector and LNG Exports Offer Some Support

Electricity generation continues to rise, which is a modestly supportive factor for natural gas. U.S. power output rose 6.4% year-over-year in the week ending April 12. LNG exports remain steady at 15.6 bcf/day, and policy shifts could boost demand further down the line. The Biden administration’s earlier pause on LNG export approvals was lifted, potentially unlocking over a dozen new projects. Still, these developments are long-term in nature and offer limited short-term price support.

Outlook: Bearish Unless Key Support Holds

In the short term, the path of least resistance remains to the downside. Unless the 200-day moving average provides a firm technical floor, selling pressure could intensify with $2.199 as the next major target. A meaningful rally will likely require a shift in weather patterns or a surprise demand-side catalyst—neither of which is on the immediate horizon. For now, traders should stay cautious and watch support levels closely.

More Information in our Economic Calendar.