Natural Gas News: Market Hesitates as Hot Weather Forecast Faces Uncertainty Today

Natural Gas Slips as Traders Question Heat-Driven Rally

U.S. natural gas futures are pulling back early Monday, erasing much of Friday’s sharp gains driven by hotter weather forecasts.

The reversal signals Friday’s rally was more about short-covering than conviction buying, with traders now eyeing the minor pivot at $3.577 to test underlying interest. A break below could invite another retest of Friday’s lows, while a hold may trigger a limited rebound.

At 12:34 GMT, Natural Gas futures are trading $3.582, down $0.157 or -4.20%.

Can Hot Weather Forecasts Sustain High Demand

Last week, forecasts from NatGasWeather and Atmospheric G2 pointed to strong heat across the southern two-thirds of the U.S., with highs in the 80s to 100s across major East Coast cities and strong cooling demand into early July.

However, the current price retreat suggests traders are reassessing whether the heat will translate into sustained demand pressure, especially as lighter demand persists across the northern third of the country with milder temperatures.

EIA Inventories and the Federal Reserve’s Inflation Path in Focus

Thursday’s EIA report added to bearish undertones, showing a +96 bcf injection, well above the consensus of +88 bcf and the five-year average of +79 bcf, signaling ample supply with inventories now 6.6% above the five-year seasonal average.

Additionally, easing geopolitical tensions, including the Israel-Iran ceasefire, have reduced near-term LNG disruption risks via the Strait of Hormuz, removing a bullish tailwind from the market.

LNG Exports, Rig Counts, and Production Trends Drive Supply Narrative

Lower-48 dry gas production remains solid at 105.2 bcf/day (+1.7% y/y), while gas demand sits at 74.3 bcf/day (+1.0% y/y). LNG net flows to export terminals remain firm at 14.8 bcf/day (+7.4% w/w).

Baker Hughes reported a slight rig count decline to 109, easing from the recent 15-month high of 114 but maintaining an upward trend since last September’s lows. Traders remain attentive to these production and export flows, which are keeping domestic supply well-balanced.

Will Natural Gas Overcome the 50-Day Moving Average

Despite Friday’s rally, traders remain cautious, expecting rallies to face selling pressure unless the 50-day moving average at $3.900 is convincingly cleared, which could open the door to $4.048.

However, without a clear catalyst, such as a persistent heat-driven spike in demand, the path higher looks constrained in the near term. The market leans neutral-to-bearish unless weather forecasts firm up, with a high probability of range-bound trade this week as traders gauge physical demand signals against a well-supplied backdrop.

More Information in our Economic Calendar.