Natural Gas News: Warm Weather, High Output Cap Gains Despite Bullish EIA Report

Natural Gas Slips After Bullish EIA Miss as Traders Fade Breakout

U.S. natural gas futures are pulling back Friday after a sharp reversal from Thursday’s failed breakout rally. Despite a smaller-than-expected storage build triggering a price surge to $3.585, selling pressure quickly returned, confirming a bearish technical pattern. The move highlights a common summer-to-fall trading behavior in this market: rallies are sold, not chased.

At 12:44 GMT, Natural Gas Futures are trading $3.354, down $0.088 or -2.56%.

Thursday’s spike through key resistance levels at $3.489 and $3.529 was driven by the EIA’s weekly injection of just 53 Bcf—well below both the consensus estimate of 64 Bcf and the five-year average of 85 Bcf. However, the rally was short-lived. Updated weather models turned warmer for mid-October, pressuring prices back below the breakout zone. Friday’s early trade confirms Thursday’s bearish reversal, putting the focus on near-term downside targets.

Will Technical Levels Hold as Prices Test the 50-Day Moving Average?

Futures are now approaching the 50-day moving average at $3.291, a level that will likely determine near-term direction. A sustained hold above this level could trigger a bounce back toward the $3.529–$3.585 resistance zone. However, failure to hold could open the door for a decline toward $3.122–$3.063, with the next key support band at $2.986–$2.938. The downside risk is heightened by seasonal weakness, as traders typically fade rallies into mild shoulder-season demand.

EIA Storage Miss Doesn’t Offset Ample Supply and Weak Demand

Despite the bullish surprise from the EIA, total storage stands at 3,561 Bcf—171 Bcf above the five-year average and 21 Bcf higher than this time last year. This reflects strong production and soft demand. BNEF data shows dry gas output hit 107.1 Bcf/d on Thursday, up 4.9% year-on-year, while Lower 48 demand dropped 4.4% to 67.9 Bcf/d. LNG exports dipped slightly to 15.3 Bcf/d. The Waha Hub cash market also hit record lows ahead of the PHP pipeline outage, underscoring regional bottlenecks.

Could Warm Weather and Strong Output Keep a Lid on Prices?

Forecasts for October 2–8 show weak national gas demand, with warm temperatures across most of the U.S. Atmospheric G2 is also calling for above-normal heat from October 12–16. This could further suppress residential and commercial heating load, keeping physical demand soft even as electricity output trends higher. The Edison Electric Institute reported a 5.96% year-over-year increase in U.S. electricity generation last week, but it hasn’t been enough to tip the demand balance meaningfully.

Market Forecast: Bearish Near-Term Outlook as Reversal Pattern Holds

The confirmed bearish reversal and seasonal low demand suggest more downside in the near term. A test of the 50-day MA near $3.291 is likely, and failure to hold that level could spark further liquidation. Until temperatures cool materially or production slows, natural gas prices are expected to remain under pressure.

More Information in our Economic Calendar.