Natural Gas News: Will a Tight EIA Report Keep October Futures Above $3.00?

Natural Gas Pushed Above $3.00 Ahead of Thursday’s Storage Report

October natural gas futures reached $3.026 Thursday morning, up 1.29%, ahead of the EIA storage report at 14:30 GMT. The contract cleared $3.00 for the first time since the rally began in late August on heat that has not faded and LNG feedgas running at the strongest levels of the year. Analysts expect another below-normal injection and production near 112 to 115 Bcf per day has not slowed the rally. Thursday’s report decides whether it should have.

Daily October Natural Gas Futures Technical Analysis

October natural gas futures are nearly flat shortly before the release of the EIA storage report at 14:30 GMT. The overnight surge to $3.026 suggests traders are leaning toward a bullish number. But they could also already be looking beyond this report to next week’s storage data.

With the market on the strong side of the 50-day moving average at $2.906, buyers now have their eyes set on the three-month retracement zone at $3.044 to $3.133.

The key to sustaining the upside bias is holding above the 50-day moving average. If the rally gains traction, buyers will try to establish $3.044 as support. Once through the upper, or 61.8%, level at $3.133, the possibility of an acceleration increases, with the 200-day moving average at $3.384 the primary target.

The Storage Surplus Keeps Shrinking

A 29 Bcf build puts working gas near 3,213 Bcf. The surplus to the five-year average would drop to about 159 Bcf from 167 Bcf and the deficit to last year would widen to roughly 51 Bcf.

Last week’s 15 Bcf injection already gave buyers a reason to defend the market. Only 31 Bcf went into storage in the two weeks after August 7. The refill season is still adding gas. It is not adding enough to keep the seasonal surplus from closing. The number below 20 Bcf is the one that gives buyers a reason to press through $3.00. Anything above the five-year average and production is back in control.

Heat Has Not Shifted Into the Normal September Pattern

The weather models turned hotter across the Midwest and East for September 7-11 and shifted warmer across the Midwest for September 12-16. Above-normal temperatures remain in the South, East and parts of the Mississippi and Ohio valleys. Power generators are still burning gas for cooling at a time when demand normally starts to ease.

Lower-48 gas demand was estimated at 79.5 Bcf per day, up 7.6% from a year ago. Gas-fired generation does not need to set records every day to keep injections tight. It just needs to hold across the large population centers long enough to keep air conditioners running. Thursday’s price above $3.00 says traders are paying for the heat in front of them.

LNG Feedgas Near 19.6 Bcf and Europe Is Still Paying Up

Feedgas deliveries to U.S. export terminals have been running near 19.6 Bcf per day after Freeport returned from maintenance. Golden Pass is still ramping up. Gulf Coast liquefaction plants are competing with regional power generators for the same gas while the South remains hot.

The U.S.-Iran conflict has added to the export story. Shipping through the Strait of Hormuz remains restricted. About 10% of Europe’s gas supply from Qatar moves through the waterway. European storage stood near 65% full at the end of August against a five-year seasonal average near 82%. The export bid is not fading at the normal seasonal pace.

Production Is Strong and the Pipelines Are Fuller

Lower-48 dry gas production has been running near 112 to 115 Bcf per day. Baker Hughes reported active gas rigs rose by five to 132, a five-month high sitting just below February’s three-year high of 134. New Permian takeaway capacity eased the bottlenecks in West Texas and Waha cash prices firmed. More gas is moving out of the basin and into a pipeline network that is also feeding Mexico, Gulf Coast LNG terminals and gas-fired power stations across Texas.

The EIA raised its 2027 production forecast to 116.0 Bcf per day from 115.3 in July. Mexico is pulling more pipeline gas south of the border and Gulf Coast export terminals are competing with Texas power plants for the same supply. The EIA still expects storage to reach 3,985 Bcf by the end of October, the highest in 10 years and about 5% above the five-year average. That forecast is still hanging over every rally but the weekly reports keep showing the gas is getting consumed before it reaches the ground.

What to Watch

Thursday’s EIA report at 14:30 GMT lands with October futures already above $3.00. The market rallied into the number on heat and feedgas near 19.6 Bcf per day. Analysts expect 29 Bcf against a five-year average of 37 Bcf. A number below 20 Bcf is the one that keeps the breakout trade alive. Anything above the five-year average and sellers have their first clean shot in a week.

The near-term read stays bullish while October futures hold above the 50-day moving average at $2.906. Buyers are pressing into the retracement zone at $3.044 to $3.133 and that is where the first real profit-taking test happens. The 200-day moving average at $3.384 sits above the zone. The 50-day at $2.906 is the only level that matters if sellers come back.

More Information in our Economic Calendar.