Natural Gas News: Chart Analysis Points to Breakdown Risk Below $2.887 Support

Natural Gas Pressured by Supply and Mild Weather as Key Support Levels Come Into View

Natural gas futures started the week slightly lower, building on last week’s losses as oversupply and cooler weather continued to dominate sentiment. With the October contract settling at $2.888 last Friday—down 1.74%—traders are eyeing whether the current consolidation will hold or lead to deeper downside.

At 12:23 GMT, Natural Gas Futures are trading $2.894, up 0.006 or +0.21%.

Is Oversupply Still Leading the Narrative?

The market remains burdened by a steady stream of bearish supply data. The latest EIA report posted a +90 Bcf injection for the week ended September 12, significantly above the +81 Bcf consensus and the five-year average of +74 Bcf. Total storage now sits 6.3% above the five-year norm. That’s despite inventories being marginally lower year-over-year, a stat that’s offered little support as supply pressures continue to mount.

Lower-48 dry gas output reached 107.6 Bcf/day on Friday—up 6.1% from a year ago—while drilling activity remains elevated. LNG exports at 15.3 Bcf/day are steady but insufficient to absorb excess supply, especially with domestic consumption slipping as weather patterns cool.

Will Cooling Temperatures Drag Demand Even Lower?

After weeks of late-summer heat that propped up power burn, forecasts are now trending cooler. Atmospheric G2 is projecting lower temperatures across major demand regions starting September 24, reducing air conditioning needs and likely cutting power sector gas usage further.

National demand dropped to 73.1 Bcf/day last Friday, down 4.6% from the same time last year. While power generation has been a relative bright spot, overall consumption is now falling in line with seasonal patterns—weakening the demand floor at a critical technical juncture.

Can Technical Support at $2.887 Hold?

Price action is testing the lower end of a key retracement zone between $2.947 and $2.887, tied to the minor $2.695–$3.198 range. A sustained break below $2.887—already being tested in early Monday trade—opens the door for sellers to push toward major support at $2.695–$2.647.

Conversely, reclaiming $2.947 would signal potential for a short-covering rally toward $3.098, the 50-day moving average. Bulls are attempting to form a secondary higher bottom in this zone, but momentum is weak and sellers remain in control.

Market Forecast: Bearish Bias Holds Unless Bulls Defend Key Levels

The short-term outlook remains bearish. Persistent oversupply, falling weather-driven demand, and technical vulnerability all lean in favor of continued pressure. A break below $2.857 would further confirm downside risk toward $2.695. However, should bulls hold $2.887 and reclaim $2.947, a retracement to $3.198–$3.238 remains on the table. Until then, sellers have the upper hand.

More Information in our Economic Calendar.