Natural Gas News: Reversal Bottom Forms After Weak Longs Flushed, Gains Face Resistance

Natural Gas Futures Stabilize as Technical Reversal Emerges but Bearish Fundamentals Persist

U.S. natural gas futures showed modest strength late Friday, rebounding from early losses and signaling a potential short-term recovery. After dipping to $2.893 early in the session, November futures reversed higher, reclaiming the key $2.938 level and closing near $2.954/mmBtu. The move has sparked interest in a possible short-term counter-trend rally, though underlying fundamentals remain heavily weighted to the downside.

At 16:56 GMT, Natural Gas Futures are trading $3.008, up $0.070 or +2.38%.

Is This a Technical Rebound or Start of a Broader Recovery?

The session’s price action was largely technical, sparked by sell stops that triggered a breakdown below a long-term support zone. However, once selling dried up, bargain hunters stepped in, driving a bounce that may confirm a closing price reversal bottom. While this could open the door to a 2–3 day counter-trend rally, traders are unlikely to commit to a sustained move higher until prices clear the 50-day moving average at $3.237. This level remains the dominant trend indicator, and the lack of fundamental support tempers any bullish enthusiasm.

Weather Outlook and Storage Data Keep Pressure on Bulls

Fundamentals continue to paint a bearish near-term picture. Weather forecasts through October 22 call for mild conditions across major demand centers, with light to moderate heating demand expected. This is limiting upside potential, as traders expect continued strong injections into storage. The latest EIA report confirms this, showing a net build of 80 Bcf for the week ending October 10, lifting total inventories to 3,721 Bcf — 154 Bcf above the five-year average.

Production Recovery Adds to Bearish Weight

In addition to mild weather, production is beginning to rebound. Analysts at EBW Analytics project that mid-summer output levels could be fully restored by Thanksgiving. Combined with rising stockpiles and subdued demand, this adds further headwinds to any bullish momentum in the short run. EBW expects inventories to exceed 3,950 Bcf by mid-November, suggesting capacity limits could be tested unless colder weather materializes soon.

Will Traders Respect the Technical Setup or Stick with the Fundamentals?

While Friday’s reversal may invite some technical buying early next week, the broader outlook remains bearish without a clear shift in weather or demand. Until the market builds a firm support base and challenges the 50-day moving average, gains are likely to be sold into.

Market Forecast: Bearish Short-Term Bias

Despite the technical rebound, the near-term view remains bearish. Storage overhang, mild temperatures, and recovering production all suggest upside potential is limited without a fundamental catalyst. Traders should watch for resistance near $3.237, but expect further consolidation or downside unless storage injections slow or weather-driven demand increases.

More Information in our Economic Calendar.