Natural Gas News: Weekly Forecast Sees Rally Extending Toward $3.238 Resistance

Natural Gas Futures Rebound on Technical Reversal, But Fundamentals Remain Heavy

Natural gas futures rallied last week, gaining over 8% to settle at $2.997, as traders responded to a technical reversal pattern and a second straight bullish EIA storage surprise. But while price action suggests a potential counter-trend rally, weak demand and surging production continue to limit the upside case.

Are Tighter Storage Builds Starting to Matter?

The latest EIA report showed an +18 Bcf injection for the week ending August 22—well below consensus estimates of +27 Bcf and a five-year average of +38 Bcf. This follows a similarly light +13 Bcf build the prior week, adding weight to the view that storage is tightening modestly. Inventories are now 3.5% below last year’s level, though still 5% above the five-year norm. While the storage backdrop is improving, it hasn’t yet shifted broader sentiment, which remains tethered to bearish supply and weather trends.

Is Production Overwhelming Demand?

Dry gas production remains elevated, averaging over 107 Bcf/day and posting year-over-year growth between 3% and 6% throughout the week. Meanwhile, lower-48 demand fell to 72.4 Bcf/day, down over 15% year-over-year.

Power burn has been soft, with mild temperatures across major regions like the Midwest and Northeast capping late-summer cooling loads.

LNG exports held near 15.5 Bcf/day, providing some support but not enough to offset the domestic oversupply.

Has the Technical Picture Shifted?

On the weekly chart, the market posted a potentially bullish closing price reversal bottom—signaling that buying is outweighing selling at current levels. A trade through $3.023 would confirm the reversal and could trigger a 2–3 week counter-trend rally. The first upside target is $3.238. If that level is broken with conviction and a bullish catalyst—such as a deeper storage draw or a weather shift—the next upside marker is the 52-week moving average at $3.794.

However, a move back below $2.695 would negate the reversal and expose the long-term bottom at $2.647. Until the $3.023 trigger is cleared, the broader downtrend remains intact.

Market Forecast: Tentative Bullish Bias with Defined Triggers

The weekly close suggests a possible inflection point, but fundamentals remain soft. Traders should view the market as range-bound unless $3.023 is taken out with strength. A confirmed breakout opens the door to $3.238, while failure to build on recent gains could quickly retest $2.695. Positioning should remain tactical as the market tests these key weekly levels.

More Information in our Economic Calendar.