Natural Gas News: Short Squeeze Pushes Futures Higher—Forecast Eyes 50-Day Moving Average Barrier

Natural Gas Futures Rally Into Resistance as Short Covering Extends Weekly Gains

U.S. natural gas futures climbed for a fifth straight session on Friday, with bulls eyeing the $3.039 swing top after clearing key resistance at $2.922. The market is up 0.21% for the week, supported by a short-covering rally as traders liquidate oversold bearish positions. With the September contract approaching expiration, the rally appears technical in nature, lacking fresh fundamental support as supply remains abundant and demand forecasts soften.

At 15:58 GMT, Natural Gas Futures are trading $2.950, up $0.006 or +0.20%.

Can Natural Gas Break Through the $3.221–$3.300 Resistance Cluster?

The next technical hurdle lies at $3.039, with stronger resistance building at $3.221 — a swing top — and clustering with a 50% retracement at $3.238 and the 50-day moving average at $3.300.

A move above this zone could force more short-covering, but many market participants suggest large sellers are waiting to reestablish bearish positions at higher levels. With no new demand catalyst and production near record highs, upward momentum could face stiff resistance.

Bullish EIA Inventory Miss Lifts Futures, But Weather Trends Turn Bearish

Thursday’s EIA report helped fuel the rally, showing an +18 Bcf storage build versus expectations of +27 Bcf and a five-year average of +38 Bcf. This surprise bullish miss gave bulls enough momentum to extend gains, though weather outlooks remain broadly bearish.

Vaisala forecasts cooler-than-normal conditions across much of the U.S. from September 4–8, curbing late-summer cooling demand. Atmospheric G2 also flagged cooler temperatures for the eastern two-thirds of the U.S. heading into early September.

Production Surges While Demand Slips—Is the Rally on Thin Ice?

U.S. dry gas production reached 107.1 Bcf/day on Thursday, up 3.1% year-over-year and near record highs. Meanwhile, lower-48 demand fell to 72.4 Bcf/day, down 15.2% from a year ago. LNG exports held at 15.4 Bcf/day, up modestly week-over-week, but not enough to offset surging supply.

Storage remains adequate, with inventories +5.0% above the five-year average. These fundamentals point to a still-loose market, making the recent price recovery vulnerable unless supported by stronger demand or export growth.

Is ExxonMobil’s LNG Forecast Too Far Out for Traders to Care?

ExxonMobil projected a 20% rise in global gas consumption and a doubling of LNG trade by 2050, citing rising demand from Asia Pacific and growing industrial electrification. While bullish in the long run, these forecasts are too far on the horizon to shift short-term trading strategies. Near-term sentiment remains tied to U.S. production, weather, and storage.

Market Forecast: Bearish Reentry Expected Near $3.221–$3.300 Resistance Zone

With the rally showing signs of exhaustion near critical resistance and underlying fundamentals staying bearish, the market is vulnerable to a pullback.

Unless another storage miss or weather revision emerges, traders should expect renewed selling pressure between $3.221 and $3.300, setting the stage for a potential retracement into early next week.

More Information in our Economic Calendar.