Natural Gas News: Weather Forecast Mixed as Futures Test 200-Day MA

July Natural Gas Contracts Test Key Technical Support

Natural gas futures remain trapped in volatile, rangebound action as July contracts test critical technical levels while fundamentals present conflicting signals. The prompt month dropped 4.6 cents to $3.589/MMBtu Tuesday morning after Monday’s 14.9-cent selloff pushed prices to the 200-day moving average at $3.564.

At 13:27 GMT, Natural Gas Futures are trading $3.618, down $0.017 or -0.47%.

Will the 200-Day Moving Average Hold or Break?

The key technical level at $3.564 represents a potential trigger for further downside acceleration toward support zones at $3.437 and $3.381. However, recent breaks of the 200-day MA have actually attracted fresh buying interest, creating bear trap conditions for short sellers. Monday’s price action saw nearly 10 cents of movement in under an hour, swinging from $3.566 to $3.662 as traders remained uncertain about direction.

Storage Builds Continue Above Seasonal Norms

Fundamental pressure comes from abundant supply conditions, with inventories sitting 4.7% above the five-year seasonal average as of May 30. Last week’s EIA report showed a bearish 122 Bcf build, exceeding expectations of 113 Bcf and well above the typical 98 Bcf seasonal increase. Production remains robust at 105.6 Bcf/day, up 3.4% year-over-year, while active drilling rigs climbed to a 15-month high of 114 units.

Weather Forecasts Offer Mixed Demand Signals

Near-term cooling trends across the Midwest, Plains, and Ohio Valley are expected to keep demand moderate through mid-June, with comfortable temperatures in the 60s to lower 80s. However, intense heat is building across the West and Pacific Northwest, with highs reaching mid-80s to 100 degrees. The southern and eastern regions will see warm to very warm conditions with temperatures in the 80s-90s, locally reaching 100 degrees in California and the Southwest.

Second-Half Tightening Expectations Support Bulls

Despite current oversupply conditions, market participants are positioning for significant balance improvements in the second half of the year. LNG export flows averaged 13.6 Bcf/day, up 2.7% week-over-week, providing steady demand support. Lower-48 gas demand registered 69.9 Bcf/day, showing 4.7% year-over-year growth.

Market Forecast: Range-Bound Until Weather Clarity

Expect continued choppy trading between $3.40-$3.70 as loose immediate fundamentals battle against second-half tightening expectations. The 200-day MA at $3.564 remains the critical pivot point. A decisive break below could trigger stops toward $3.437, while any weather-driven demand surge could spark a squeeze back toward $3.70. Monitor upcoming EIA storage reports and weather model shifts for directional catalysts.

More Information in our Economic Calendar.