Natural Gas News: Futures Stuck Between Supply and Weather With $2.749 Pivot

June Natural Gas Stuck in the Middle With No Clear Buyer or Seller

June natural gas futures are trading at $2.741, down $0.028 or 1.01% late Friday and the market has now spent three straight weeks going nowhere. Bulls got a storage number they could work with Thursday. Bears have record production on their side. Neither one is winning right now and the chart is reflecting exactly that.

The Storage Number That Gave Bulls a Foothold

Thursday’s Energy Information Administration storage report came in at 63 Bcf for the week ending May 1. Traders were looking for 72 Bcf. The five-year average for that week is 77 Bcf. Sixty-three against seventy-two with a five-year average of seventy-seven. That is three layers of bearish expectation that did not show up and the shorts felt it instantly. Traders who had been leaning on supply building too fast had nowhere to hide. They covered and prices lifted off the lows.

One week of tighter than expected injections does not change the supply story. But it does plant a seed of doubt and that is enough to keep sellers from pressing hard at current levels.

Production Is Still the Problem

The Energy Information Administration raised its 2026 U.S. dry gas production outlook to 109.59 Bcf per day. Lower-48 production hit 110.9 Bcf per day Thursday, up 4.5% year-over-year and sitting near record highs. Rig counts are still elevated. U.S. gas rigs dropped by one this week to 129 but that total is still 21 rigs above where it was a year ago. The supply machine is not slowing down and one below-average storage injection does not change that math.

Storage levels as of May 1 are still 6.7% above the five-year seasonal average. Earlier in April that number was 7.7% above normal and that is what pushed prices to a 1.5-year low. The cushion has narrowed slightly but comfortable is still comfortable.

The Global Picture Is More Interesting

The Strait of Hormuz is closed and that fact is not getting the attention it deserves in the natural gas market. European and Asian buyers who normally pull LNG from the Middle East have to get it somewhere else. U.S. export terminals are the most obvious place to look. That flow has not shown up cleanly in the weekly feedgas numbers yet but the pressure is building and it does not reverse until the Strait reopens.

Qatar’s Ras Laffan took hits earlier this year and 17% of its export capacity went offline. Not for a few weeks. For years. I’ve been in this business long enough to know what years means in an energy market. Buyers who relied on that supply don’t have a choice. They find it somewhere else every month until Ras Laffan is back online. That is not a short term scramble. That is years of redirected demand and U.S. export terminals sit directly in that path. I’ve watched big structural stories get ignored because a louder number was dominating the week. Right now the weekly storage report is that number. When it stops dominating, Ras Laffan gets the attention it deserves and this market reprices fast.

Short term LNG feedgas flows dipped 5.9% week-over-week to 17.7 Bcf per day Friday which capped some of the upside. But the structural demand picture from global LNG disruptions has not gone away.

Technical Outlook

June natural gas futures are edging lower late Friday as prices continue to consolidate for the third week. At 18:56 GMT, June natural gas futures are trading $2.741, down $0.028 or -1.01%.

The near-term range the market has been working inside since April 22 is $2.905 to $2.592. The mid-point of this range is $2.749. Traders have been straddling this price since Wednesday with no real dominant seller or buyer present. Nonetheless, my work indicates that reaction to this price is likely to set the tone over the near-term.

A sustained move over $2.749 will indicate the presence of buyers. This could drive prices into the pair of tops at $2.883 and $2.905, followed by the 50-day moving average at $2.968. I expect sellers to return on the first test of the 50-day MA, but overcoming it could launch a further rally into the $3.622 to $2.592 mid-point at $3.107.

A sustained move under $2.749 will signal the presence of sellers with potential downside targets at $2.676 and $2.592. If the latter fails then the selling pressure could extend into multi-month lows at $2.564 and $2.475.

What I’m Watching

The $2.749 mid-point is the only level that matters right now. June natural gas futures have been straddling it since Wednesday and neither side has made a decisive move. Push through $2.749 and the 50-day moving average at $2.968 becomes the next argument. Lose it and the multi-month lows at $2.564 and $2.475 are back on the table.

I’ve seen this market sit in a range like this for weeks waiting on one weather forecast to change everything. Summer heat expanding later this month does that fast. Until it does, every rally in June natural gas futures is a question that needs an answer before it becomes a trade.

More Information in our Economic Calendar.