Natural gas futures edge below $3 as rising production, weak demand, and mild weather forecasts pressure the market. Traders eye key support at $2.885.
Natural Gas Futures Struggle Near $3 as Storage Builds and Mild Weather Pressure Prices
U.S. natural gas futures extended their decline Thursday, sliding toward $3.00 as oversupply concerns and mild near-term weather forecasts continued to weigh on sentiment. The September Nymex contract briefly broke below $2.99 earlier in the session, marking a continuation of the bearish trend, though a late-session reversal could signal a technical bottom if confirmed on Friday.
At 12:13 GMT, Natural Gas futures are trading $3.038, down $0.007 or -0.23%.
Is Rising U.S. Production Overpowering Seasonal Demand?
Natural gas supply continues to outpace demand, with Lower 48 dry gas output reaching 108.4 Bcf/day on Wednesday—up 3.4% year-over-year. In contrast, demand sat at just 84.5 Bcf/day (+1.9% y/y), according to BNEF. Adding to the bearish tone, Baker Hughes reported five additional rigs last week, bringing the total to 122—the highest in nearly two years. The growth in rig count reinforces expectations for elevated production through Q3, intensifying concerns of an oversupplied market.
Will Mild Weather Further Erode Cooling Demand?
Weather forecasts are offering little support. Vaisala projected below-normal temperatures across the East Coast for August 4–8, likely suppressing power-sector gas burn tied to air conditioning. While the August 9–13 period could see a warming trend, especially in the West and East, traders are unconvinced this will be enough to reverse current sentiment. A break in July heat during a critical demand window is keeping bulls on the sidelines.
Can Storage Build Forecasts Add Downward Pressure?
Market participants expect the next EIA report to show a +36 Bcf injection for the week ending July 25, well above the five-year average of +24 Bcf. This would follow last week’s smaller-than-expected +23 Bcf build, which momentarily supported prices. Inventories remain 5.9% above the five-year average, despite being 4.8% lower year-over-year, pointing to ample supply coverage into late summer.
Will Electricity Demand Offer Any Relief to Nat Gas Bulls?
Electricity demand has shown strength, with the Edison Electric Institute reporting an 8.1% year-over-year increase for the week ending July 26. While positive for natural gas usage in power generation, it has so far failed to offset pressure from increased production and weak weather-driven demand.
Market Forecast: Bearish With Key Support at $2.885
Daily Natural Gas
Until a clear catalyst—weather-related or storage-driven—triggers a turnaround, bearish momentum looks set to persist. Technically, prices are testing near-term support around $3.00, with the next key level at $2.885. Resistance remains layered at $3.367 and $3.707. Unless bulls reclaim territory above these levels, traders should brace for further downside.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
