Natural Gas News: Futures Sink Below 200-Day SMA on Weak Weather and Storage Outlook

Natural Gas Slides as Cooling Outlook, Bearish Technicals and Storage Expectations Drive Selloff

Natural gas futures extended their slide Wednesday, with July Nymex contracts falling 3.7% to $3.582/MMBtu—the lowest close in two weeks. A confluence of cooling forecasts, a potentially oversized storage build, and a deteriorating technical picture fueled the bearish tone. With Thursday’s EIA report and Friday’s front-month rollover to August, traders are reassessing summer gas demand and positioning accordingly.

Are Forecasts Undermining the Bullish Summer Demand Narrative?

Weather continues to drive sentiment. The Commodity Weather Group projects a cooling trend across the eastern U.S. from late June into early July, softening demand for gas-fired power used for air conditioning.

NatGasWeather, however, maintains that the South and East will remain hot through July 1, with highs in the 80s to 100s and possible record temperatures in major East Coast cities. Wind generation—recently strong—will decline in coming days, potentially lifting gas burn. Still, the market appears more focused on the moderation in broader temperature patterns and demand fading in key regions.

Will Storage Continue to Outpace Seasonal Norms?

Expectations for Thursday’s EIA report call for an 88 Bcf injection for the week ending June 20, above the five-year average of 79 Bcf. Last week’s 95 Bcf build underscored growing surplus concerns, especially with inventories now 6.1% above their five-year seasonal average. Traders are watching whether repeated above-average builds will further cap any summer rally.

How Is the Technical Setup Adding to Downside Pressure?

Natural gas has broken below key trend support and is now trading decisively under both the 50-day ($3.90) and 200-day ($3.778) moving averages. The market is sitting just above the April low at $3.544—now a key support level. A sustained move below this level could open the door to further downside toward $2.885 or even $2.498. With both moving averages acting as resistance and recent highs near $4.31 and $4.35 proving too strong, momentum has clearly tilted in favor of the bears.

Geopolitical Easing and Supply Resilience Weigh Further

The Israel-Iran ceasefire has reduced risk premiums tied to potential LNG disruptions through the Strait of Hormuz, responsible for roughly 20% of global LNG traffic. U.S. LNG exports remain firm at 14.7 Bcf/day (+9.2% w/w), but supply confidence remains high. Dry gas output hit 105.9 Bcf/day (+2.9% y/y), while demand slipped to 79.9 Bcf/day. Power generation also fell 3.1% y/y, further dampening domestic consumption.

Short-Term Outlook: Bearish Below Key Technical Resistance

With the market now entrenched below the 200-day moving average and sentiment turning negative on weather and storage, the short-term outlook remains bearish. Unless Thursday’s EIA report surprises with a smaller build or weather re-accelerates demand, rallies are likely to face stiff resistance near $3.78–$3.90. A break below $3.544 would likely accelerate selling.

More Information in our Economic Calendar.