U.S. natural gas futures are gaining momentum as traders anticipate the Energy Information Administration’s (EIA) weekly storage report, which is set to be released today at 14:30 GMT. Market expectations of increased demand are providing additional support, with prices nearing a significant technical level. The July 22 main top at $2.315 is in focus, potentially triggering an acceleration towards the 50-day moving average of $2.461.
At 12:06 GMT, Natural Gas Futures are trading $2.231, up $0.012 or +0.54%.
On Wednesday, natural gas futures rebounded after a brief period of weakness, driven by expectations of a bullish storage report. The possibility of a rare midsummer storage draw has heightened market activity, indicating tightening market balances. This optimism is reflected in the recent rally, supported by a surge in bullish sentiment among money managers, who have increased their net long positions to a six-week high. The unwinding of short positions and forecasts for rising cooling demand across the Lower 48 states have drawn new buyers into the market.
Today’s EIA report is pivotal, with a wide range of survey estimates predicting a storage change between 0 and 9 Bcf, with most analysts leaning towards a minimal build of 0-1 Bcf. However, some forecasts suggest a potential draw of -1 Bcf, which would reduce the current surplus from +423 Bcf to approximately +380 Bcf. This expected draw is attributed to higher cooling degree days (CDDs) and lower wind energy generation, which has boosted natural gas demand, according to NatGasWeather.
The weather remains a critical factor, with forecasts from NatGasWeather indicating strong demand through the weekend. High-pressure systems across the western, central, and southern U.S. are expected to maintain temperatures in the upper 80s to 100s, driving significant demand. Meanwhile, the Midwest, Ohio Valley, Great Lakes, and Northeast will experience lighter demand due to cooler weather systems.
The current market conditions suggest a bullish outlook for U.S. natural gas futures. The combination of anticipated strong demand, potential storage draws, and bullish trader sentiment is likely to drive prices higher in the near term. If the EIA report confirms a storage draw, it could further support an upward trend, with the next technical target at $2.461.
Natural gas futures are edging higher on Thursday after establishing support at $2.149. A sustained move over this level could create the momentum needed to challenge the next main top at $2.315. This is a potential trigger point for an acceleration into the 50-day moving average at $2.461.
On the flipside, if $2.149 fails as support, prices could collapse into a short-term pivot at $2.079 over the near-term.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.