Natural Gas News: Futures Stall Below $2.966 as Bearish Market Limits Short-Covering Rally

Is the $2.966 Resistance Level Still Holding Control Over Price Action?

U.S. natural gas futures are slightly lower at mid-session Monday as traders digest a three-day rebound and assess whether a short-term floor is forming. Last week’s trading range between $2.764 and $2.966 remains key, with today’s action suggesting consolidation rather than conviction. The $2.956 pivot and minor top at $2.966 continue to cap upside momentum, and failure to breach these levels could indicate sellers remain in control.

At 16:45 GMT, Natural Gas Futures are trading $2.900, down $0.016 or -0.55%.

A decisive breakout above $2.966 would open the door to an upside target zone between $3.148 and $3.236. However, a lack of sustained buying pressure leaves the market vulnerable to a test of support at $2.764 and potentially deeper levels at $2.748 or even $2.574 if downside triggers are activated. While a sharp rebound isn’t expected, traders should watch for a short-covering move that could eventually challenge the 50-day moving average near $3.400.

Will Hot Weather and Power Demand Offset Storage Pressure?

According to NatGasWeather, strong upper-level high pressure will dominate most of the U.S. through August 20, driving highs into the upper 80s to 100s, particularly across the Southwest and Texas. This pattern supports high national demand, though cooler temperatures in the northern tier may slightly temper consumption.

Increased demand from power generation and elevated LNG exports are expected to trim weekly injection volumes through October. However, the current storage overhang could continue to pressure prices unless demand spikes beyond forecasts or supply unexpectedly tightens.

How Is EIA’s Storage Outlook Weighing on Trader Sentiment?

The U.S. Energy Information Administration (EIA) projects natural gas inventories will reach 3,872 bcf by end-October—roughly 2% above the five-year average. The most notable data point for traders is the stretch of seven consecutive weeks of injections above 100 bcf, a trend not seen since 2014.

As of August 8, total inventory was 7% above the 2020–24 five-year average, a sharp rise from 4% below average at the end of March. The largest contributions to this build came from the South Central, Midwest, and East regions. The EIA now expects South Central inventories to finish the injection season at their highest level since 2016.

Market Forecast: Bearish Bias with Limited Short-Covering Potential

Given strong storage levels, capped price action below $2.966, and only modest weather-driven demand, the short-term outlook remains bearish. Any rally is likely to be short-covering in nature rather than driven by fresh buying. Traders should expect pressure to persist unless resistance is convincingly broken and injection volumes tighten more significantly.

More Information in our Economic Calendar.