Natural Gas News: Rising Output and Weak Demand Keep Pressure on Bulls

Natural Gas Futures Under Pressure as Production and Storage Trends Weigh on Market

U.S. natural gas futures ended last week at $2.916, down 2.47%, as traders sold into a bounce from a nine-month low. Despite technical support near $2.764 and a long-term floor at $2.574, the short-term bias remains bearish unless prices can reclaim key resistance levels.

Is Rising U.S. Output Capping Upside Momentum?

Natural gas prices came under pressure after the EIA raised its 2025 U.S. production forecast to 106.44 bcf/day, up 0.5% from the prior estimate. The 2026 forecast was also revised higher to 106.09 bcf/day. These projections reflect an already strong production trend, with current dry gas output in the lower 48 states at 109.9 bcf/day—up 7.3% year-over-year.

Rig counts support this trend: the active U.S. gas rig total remains near a two-year high, with Baker Hughes reporting 122 rigs last week. While that’s slightly below the recent peak of 124, it marks a steady increase from the 4-year low of 94 rigs recorded in late 2024.

Will Mixed Weather and Tepid Demand Limit Short-Covering Rallies?

A shift in short-term weather patterns also weighed on prices. Atmospheric G2 noted forecasts turned warmer in the West but cooler in the East for August 20–24, dampening the earlier bullish outlook based on widespread heat. Power demand showed signs of softening, with U.S. electricity output for the week ended August 9 falling 1.9% year-over-year, according to Edison Electric Institute data.

Lower-48 state gas demand stood at 80.3 bcf/day last Friday, up just 1.2% from a year ago, while LNG exports offered modest support at 15.7 bcf/day, up 4.8% week-over-week.

How Are Inventories Shaping Trader Sentiment?

Storage remains a headwind for bulls. Last week’s EIA report showed a +56 bcf build, slightly above expectations and well above the five-year average of +33 bcf. Inventories are now 6.6% above the five-year seasonal norm, even though they remain 2.4% below year-ago levels.

European gas storage, a key benchmark for global supply comfort, was 72% full as of August 9, compared to a 5-year average of 79%, suggesting broader supply security remains intact despite geopolitical concerns.

Market Forecast: Bearish Bias Holds Below $3.236

The short-term range of $3.707 to $2.764 places the 50% retracement at $3.236—a critical resistance level. Unless prices can push through and hold above this mark, traders should expect continued selling pressure, especially on short-covering rallies. Any test of this level is likely to draw sellers back into the market. As long as prices remain below $3.236, the outlook is bearish.

More Information in our Economic Calendar.