Natural Gas News: Short-Covering Into Weekend Meets Resistance From Bearish Chart Setup

Natural Gas Futures Edge Higher as Traders Digest Storage Miss and Weather Shift

Natural gas futures posted modest gains Friday morning, extending Thursday’s advance as traders responded to a bullish U.S. storage print and braced for weekend risk.

A mix of weather-driven demand, production trends, and positioning ahead of August continues to cap upside potential, leaving price action tethered to short-term technicals.

At 14:21 GMT, Natural Gas futures are trading $3.123, up $0.029 or +0.94%.

Can EIA Storage Surprise Fuel a Sustained Recovery?

Thursday’s U.S. Energy Information Administration (EIA) storage report offered a mild bullish catalyst. Inventories rose by 23 Bcf for the week ending July 18—undershooting consensus expectations of 27 Bcf and falling below the five-year average of 30 Bcf. This marks a slowdown in injection pace and helped support Thursday’s rally in August Nymex futures.

Yet, inventories remain fundamentally well-supplied. At 5.9% above the five-year seasonal norm and just 4.8% below year-ago levels, the storage cushion remains healthy. Traders took advantage of the tighter-than-expected build, but the broader supply picture continues to temper upside risk.

Is Production Strength Keeping a Lid on Price Gains?

U.S. natural gas production remains elevated. Lower-48 dry gas output on Thursday stood at 107.1 Bcf/day, a 2.9% increase year-over-year, according to BNEF. Further supporting the bearish case, Baker Hughes reported a jump of nine rigs last week, pushing active gas rigs to a 17-month high of 117.

In contrast, gas demand has lagged. Thursday’s Lower-48 demand came in at 82.4 Bcf/day, essentially flat from last year. LNG feedgas flows, a key export component, were also down 4.6% week-over-week at 15.0 Bcf/day. While power sector gas burn showed promise—U.S. electricity output rose 2.1% y/y for the week ending July 19—that alone has not reversed the demand imbalance.

Will Cooling Weather Knock Out Bulls’ Momentum?

A near-term cooldown is also threatening to reverse bullish sentiment. Forecasts from Vaisala suggest the current heat wave across the eastern U.S. will subside into early August, while western regions trend back toward seasonal norms. With air-conditioning load likely to ease, natural gas demand from electric utilities could falter just as production remains firm.

Market Forecast: Bearish Bias Holds Despite Bullish Storage Miss

Despite two days of modest gains, natural gas remains technically in a downtrend. A move below $3.061 could reopen the door to $2.885 support. Short-covering may lift prices toward resistance at $3.345, but robust production, flat LNG flows, and cooling temperatures keep the near-term outlook tilted bearish.

Traders should watch for technical breakdowns and signs of sustained cooling in demand centers to guide positioning.

More Information in our Economic Calendar.