Natural Gas News: Inventory Builds and Cool Temps Set Bearish Tone for Next Week

Natural Gas Futures Slip for Fourth Week as Demand Stalls, Storage Builds Accelerate

Natural gas futures continued their decline last week, with the June Nymex contract settling at $3.334, down 12.15% as cooler U.S. temperatures curbed electricity-driven demand. With forecasts pointing to mild spring conditions across key regions, storage builds have accelerated, keeping traders on the defensive. Despite regional heat spikes, the broader supply-demand setup remains soft, reinforcing a bearish short-term stance.

Will Persistent Mild Weather Undercut Bullish Sentiment Further?

Forecasters expect below-normal temperatures to persist across the East and Midwest through late May, weakening cooling demand from power generators. While Texas and parts of the South saw highs in the 90s and 100s, the broader Lower 48 experienced only modest air-conditioning needs. Vaisala’s outlook for May 19–23 anticipates even cooler conditions, adding to demand-side headwinds.

As a result, national demand has stayed light to moderate, while ERCOT-driven regional strength hasn’t been enough to lift the overall market. NatGasWeather also confirmed the lack of sustained heat will keep cooling degree days near or slightly above average, but still insufficient to drive stronger consumption.

Are Storage Builds and Production Growth Tipping the Scales?

The latest EIA report showed a 110 Bcf storage injection for the week ending May 9—right on expectations but well above the five-year average of 83 Bcf. Total U.S. inventories now stand at 2,255 Bcf, 2.6% above the five-year norm. That margin, while not extreme, signals more than adequate supply given current consumption trends.

Adding to the bearish setup, Lower 48 dry gas production rose to 105.5 Bcf/d (+4.7% y/y), while demand on Friday clocked in at just 67.3 Bcf/d (-1.6% y/y), according to BNEF. LNG feed gas flows remain steady around 14.7 Bcf/d, providing some demand support, but not enough to offset domestic oversupply concerns.

Is the Market Bracing for More Downside from Demand Weakness?

Natural gas futures have now closed lower in four straight sessions, reflecting the market’s unease with sluggish demand and expanding inventories. The Edison Electric Institute reported a 2.8% y/y drop in U.S. power output for the week ending May 10, further highlighting weaker utility demand for gas. With renewable output down, gas-fired generation ticked up modestly—but not enough to shift broader fundamentals.

With production steady and weather forecasts unsupportive, the pressure remains squarely on the demand side to rebalance the market.

Market Forecast: Bearish Until Demand or Supply Shifts

Natural gas futures closed the week below a key pivot at $3.538, which now acts as resistance. The move lower signals growing downside momentum, increasing the likelihood of a test near the 52-week moving average at $3.122—an area that helped stabilize prices during the weeks ending April 25 and May 2. If this level fails to hold, the April low at $3.035 comes into focus. A breakdown through that zone could trigger a steeper decline, with $2.376 emerging as the next major downside target.

More Information in our Economic Calendar.