Natural Gas News: Cooling Weather and High Inventory Keep Bulls on Sidelines

Natural Gas Futures Search for Support as Bulls Step Aside

U.S. natural gas futures were flat in early Monday trading, struggling to recover from last week’s sharp selloff that sent August contracts down 45.5 cents to $3.110. Sellers briefly pushed prices to $3.047 in early trading, just below last week’s low of $3.061, before short-covering lifted the market back to even. The lack of conviction on the downside suggests traders are cautious about pressing further unless a clear catalyst emerges.

At 12:58 GMT, Natural Gas is trading $3.090, down $0.020 or -0.64%.

Is Cooler Weather Still Undermining Bullish Setups?

Weather remains a primary drag on sentiment. Updated GFS and EC models have steadily trimmed cooling demand expectations, removing five cooling degree days from prior forecasts. While the southern U.S. remains warm, projected mild conditions across the Midwest and Northeast have weighed heavily on power burn outlooks. Vaisala now sees widespread moderation into early August, diminishing the odds of a weather-driven rebound in the near term.

Does Rising Production Continue to Cap Upside?

Production remains a stubborn headwind. Lower-48 dry gas output topped 107 Bcf/day last week, climbing nearly 3% year-over-year. Rig counts also surged, with Baker Hughes showing a jump to 117 by Friday and reaching 122 on the final trading day—the highest since 2023. While producers may be hedging future prices or positioning for margin improvements, the short-term result is a saturated market unlikely to find footing on fundamentals alone.

LNG Exports Falter as Global Demand Stalls

Export demand has provided little relief. LNG feedgas flows dropped to 14.7 Bcf/day last week, a 5.4% weekly decline. European storage levels sit at 66% capacity, trailing the five-year average of 74%, suggesting limited urgency for imports. Without a rebound in international demand, LNG exports are unlikely to offer meaningful upside support during the current injection window.

Will Technicals Determine the Next Move?

The technical picture is narrowing. Monday’s intraday low at $3.047 is now the line in the sand for sellers, with $2.885 marking the next major support.

Conversely, bulls may look for a short-covering move toward the short-term pivot at $3.338, though resistance is expected. Price action indicates the market may be consolidating ahead of its next leg, but direction will likely depend on any deviation in weather or export flow assumptions.

Market Forecast: Bias Bearish, with Eyes on $2.885

The near-term outlook remains bearish. With production strong, demand muted, and export flows soft, there is little fundamental support above current levels.

If weather models fail to add heat or if LNG doesn’t pick up, sellers may regain control.

A decisive break below $3.047 could accelerate a test of $2.885. Rallies face resistance near $3.338, keeping risk skewed to the downside.

More Information in our Economic Calendar.