Natural Gas News: Futures Bounce on Profit Taking While Weather, Inventory Weigh

Natural Gas Futures Attempt Rebound After Steep Sell-Off

U.S. natural gas futures are edging higher early Wednesday as traders regroup after sharp losses earlier in the week, with prices recovering from Tuesday’s five-week low of $3.293.

Profit-taking, position-squaring, and short-covering are providing support, but traders remain cautious as futures remain under the 200-day moving average at $3.788 and the 50-day at $3.800, capping upside potential without a stronger catalyst.

Can Hot Summer Weather Lift Natural Gas Futures?

Traders are closely watching heat trends, with NatGasWeather projecting highs in the 80s-100s across much of the U.S., and 105-115 in inland California and the Southwest.

A brief break is expected later this week with showers and 70s-80s in the West and Northeast, but a return to widespread heat over the weekend should keep demand elevated. However, cooler shifts for July 6-15 across the Midwest and South are reducing some demand expectations, pressuring prices in the near term.

Production Growth and LNG Demand Counterbalance Cooling Forecasts

Lower-48 dry gas production remains strong at 106.6 Bcf/d (+3.3% y/y), while demand was reported at 76.7 Bcf/d (+6.9% y/y) per BNEF, reflecting seasonal air conditioning loads despite some regional cooling.

LNG exports continue to support the market, with net flows to U.S. LNG terminals reaching 15.8 Bcf/d (+9.3% w/w). Still, these supportive demand figures are offset by elevated production, keeping the market in a near-term tug-of-war as it searches for direction.

EIA Inventory Builds Signal Ample Supply for Now

EIA storage data remains a bearish weight, with a +96 Bcf injection for the week ending June 20, above the +88 Bcf consensus and the five-year average of +79 Bcf. Inventories stand +6.6% above the five-year seasonal average, suggesting adequate supply heading into peak cooling season.

Europe’s gas storage is 57% full, below its five-year average of 66%, but current U.S. storage conditions remain the focal point for traders gauging upside constraints.

Market Forecast: Cautiously Bearish Bias Unless Weather Surprises

Near-term volatility risks remain high as traders recalibrate positions after a steep sell-off. The market has room for a rebound if hotter weather trends intensify or if LNG demand surges, but any rally is likely to be sold while futures remain below key moving averages.

Without a decisive weather-driven demand spike, the market outlook leans cautiously bearish near term, with ample supply and strong production continuing to pressure prices unless weather or exports provide a clear bullish trigger.

More Information in our Economic Calendar.