Natural Gas News: Futures Drop Again—Forecast Signals Deeper Pullback Ahead

Natural Gas Drops for Third Straight Session as Supply Builds and Weather Cools

U.S. natural gas futures extended their losing streak on Friday, closing lower for a third consecutive session. October Nymex natural gas settled down 1.74% at $2.876, marking a three-week low. The selloff came as traders responded to bearish supply data and cooler weather forecasts, both pointing to weaker short-term demand.

Is Technical Resistance Holding Back Bulls?

Earlier in the week, natural gas briefly touched $3.168 before being firmly rejected at the 50-day moving average of $3.110. That level, along with additional resistance at $3.198 and the intermediate pivot at $3.238, has so far capped upside momentum.

Price action remains locked within a one-month range of $2.695 to $3.198. The current retracement zone between $2.947 and $2.887 is under pressure, with the weekly low at $2.869 offering the last major near-term support. A break below $2.887 could open the door to a sharper downside move, targeting $2.695 to $2.647.

Is Supply Outpacing Demand?

The U.S. Energy Information Administration (EIA) reported a +90 Bcf inventory build for the week ended September 12, well above both the consensus forecast of +81 Bcf and the five-year average of +74 Bcf. This took total inventories to 6.3% above the seasonal norm, adding to the bearish tone.

Production also remains elevated. Lower-48 dry gas output hit 107.6 Bcf/day on Friday, up 6.1% year-over-year, while demand lagged at 73.1 Bcf/day, down 4.6% year-over-year. U.S. LNG export flows were steady at 15.3 Bcf/day, offering limited relief on the demand side. Meanwhile, Baker Hughes reported 118 active gas rigs, just below the recent 2-year high.

Will Cooler Weather Suppress Power Sector Demand?

Weather models turned cooler late in the week, with Atmospheric G2 forecasting a drop in temperatures for much of the U.S. from September 24–28. This shift will likely ease power burn from air conditioning demand, weighing further on gas prices.

Still, electricity output in the lower-48 rose 0.83% year-over-year for the week ending September 13, a mildly supportive data point. Over the past year, power output has climbed nearly 3%, but that strength may not be enough to counteract bearish supply trends.

Market Forecast: Bearish Bias Builds Below Key Support

With supply metrics remaining heavy, cooling weather ahead, and technical levels under pressure, the near-term outlook skews bearish. A decisive break below $2.887 would likely accelerate selling, targeting the $2.695–$2.647 zone. Bulls may attempt to defend this retracement region, but upside potential remains capped unless prices reclaim the 50-day moving average.

More Information in our Economic Calendar.