Natural Gas News: Futures Dip on Weather and Inventory Pressure, but Reversal Risk Builds Today

Natural Gas Futures Slip as Cooler Forecasts Weigh on Demand

U.S. natural gas futures extended their downside move Monday, gapping lower below last week’s low of 3.293 before finding temporary support at 3.275. The early weakness reflects weekend weather models that shifted away from the high-heat projections bulls needed to sustain momentum, extending bearish sentiment after last week’s 8.8% drop on cooling forecasts.

At 12:34 GMT, Natural Gas Futures are trading $3.339, down $0.70 or -2.05%.

Market expectations for consistent East Coast temperatures in the 80s-100s have turned toward a mix of showers and 70s-80s, undercutting peak summer demand in key urban corridors that typically drive July natural gas consumption. The cooler pattern has removed immediate weather-based upside catalysts while leaving futures vulnerable to additional selling.

Is the Supply-Demand Imbalance Capping Prices

Lower-48 dry gas production remains firm at 107.4 Bcf/d, up 3.7% year-on-year, even as rigs decline from 114 to 109, underlining operational efficiency across basins. Meanwhile, demand remains soft, ranging from 74.0 to 76.7 Bcf/d, sustaining a persistent daily surplus exceeding 30 Bcf/d that pressures both cash and futures pricing structures.

Recent EIA storage data confirmed this imbalance, with injections of +96 Bcf and +55 Bcf in consecutive weeks, both surpassing expectations and leaving inventories 6.2% above the five-year seasonal average. Without an aggressive cooling demand spike or a supply disruption, this storage cushion limits the potential for sharp price rebounds.

Are LNG Exports Enough to Absorb Surplus

LNG feed gas flows remain supportive at 14.7–15.8 Bcf/d, with recent weekly growth rates of 6.8% to 9.3% in periods, but these gains remain insufficient to absorb the structural supply overhang. Easing geopolitical tensions, including signals of an Israel-Iran ceasefire, have further reduced geopolitical risk premiums that could otherwise tighten export-driven support for futures.

Technical Levels to Watch for Reversal

Natural gas futures need to reclaim 3.293 to indicate that buyers are stepping in near current levels. A decisive move above 3.574 would suggest building demand momentum, opening potential retests of resistance at the moving average cluster of 3.791 (200-day MA) and 3.800 (50-day MA). Sellers are likely to re-enter near these levels without a return of extreme heat to drive a clear demand catalyst.

Outlook

Given persistent cooler forecasts, firm production, and elevated storage, natural gas prices are likely to remain under pressure in the near term. Bulls will require either an extended hot weather pattern or a notable production slowdown to break the current bearish structure and sustain any upside rally attempts.

More Information in our Economic Calendar.