Natural Gas News: Market Braces for Sub-$3 Move as Inventory and Supply Pressure Build

Natural Gas Posts Sharp Weekly Loss as Storage, Weather and Supply Pressure Mount

Natural gas futures dropped sharply last week, settling at $3.106 after falling 6.56%, as traders reacted to bearish supply data, resilient production levels, and a weather outlook that continues to undercut early heating demand. With the weekly close near session lows, the market is now positioned to test deeper support, leaving bulls on the defensive heading into mid-October.

Are Ample Storage Levels Limiting Upside Risk?

The latest EIA report showed an +80 Bcf injection for the week ending October 3, above consensus estimates of +77 Bcf. Working gas in storage now stands at 3,641 Bcf — 157 Bcf above the five-year average and 23 Bcf above last year. Traders expect total inventories to top 3.9 Tcf before the start of winter, significantly reducing urgency for early-season buying.

Despite some recent cooler trends, the market has seen little sign of meaningful storage drawdowns. Unless temperatures shift materially colder, the current storage buffer is likely to continue weighing on price action.

Production Remains Elevated While Demand Lags

U.S. lower-48 dry gas output ended the week at 108.1 Bcf/day — up 5% year-over-year. Meanwhile, the EIA raised its 2025 production estimate to 107.14 Bcf/day, reinforcing confidence in long-term supply growth. Baker Hughes reported a rise in gas-directed rigs to 120, just four shy of a two-year high, signaling that upstream activity remains strong despite softening prices.

Domestic demand has struggled to keep pace. Lower-48 consumption was just 66.0 Bcf/day on Friday, down 6.7% from the same period last year. This imbalance between rising production and soft demand remains a central bearish factor.

Will Warmer Forecasts Delay Seasonal Demand?

The weather outlook is working against bulls. Forecasts from Atmospheric G2 expect warmer-than-normal temperatures across the eastern U.S. from October 20–24, limiting near-term heating demand. While some colder shots have moved through the Midwest and Northeast, overall gas consumption remains light-to-moderate — not enough to meaningfully tighten balances.

LNG feedgas flows held at 16.0 Bcf/day, up modestly week-over-week, but have yet to materially increase. This export stability offers limited support in the current oversupply environment.

Weekly Technicals Point to Lower Levels if $3.063 Breaks

Technically, the market closed just above key support at $3.063. A break below this swing bottom would open the door to a test of the broader support band between $2.986 and $2.938. On the upside, resistance stands at $3.529, with stronger resistance at $3.585. Notably, the market remains under the 52-week moving average, which continues to cap long-term bullish momentum.

Market Forecast: Bearish Bias With Support at $3.063 in Focus

With the weekly trend pointing lower, strong production, and above-average storage, natural gas holds a clear bearish bias heading into next week. If $3.063 fails to hold, traders should prepare for potential tests of sub-$3.00 levels. Only a break above $3.529 would signal a reversal, but for now, the pressure remains to the downside.

More Information in our Economic Calendar.