Natural Gas News: Will EIA Report Fuel Rally to $3.800 in Natural Gas Futures?

Speculators Eyeing Return to $3.790 – $3.800

U.S. natural gas futures climbed for a second session on Thursday as traders extended a short-covering rally from Monday’s multi-month low of $3.293. The move is fueled by expectations of a smaller-than-average EIA inventory build, with the market watching closely to see if prices can challenge resistance between $3.790 and $3.800 should momentum continue.

Will EIA Inventory Data Sustain This Nat-Gas Rally

Traders expect the EIA to report a +49 bcf storage build for the week ended June 27, under the five-year seasonal average of +61 bcf. This has fueled short-covering, reinforcing a bounce off oversold levels after prices hit a five-week low on Tuesday. However, cooler temperature forecasts for July 6-15 in key U.S. regions could curb power sector gas demand, limiting upside follow-through unless data confirm tighter balances.

As of June 20, EIA reported gas inventories 6.6% above the five-year average, underscoring adequate supply conditions even as storage sits 6.6% lower year-on-year. Traders will closely track today’s EIA release for confirmation of the below-average build to assess the sustainability of the current rebound.

How Are Production and LNG Flows Supporting Price Stability

Lower-48 dry gas production remains strong at 107.1 bcf/day (+3.7% y/y), according to BNEF, while demand is steady at 75.5 bcf/day (+0.2% y/y). LNG flows to export terminals rose to 15.7 bcf/day (+6.8% w/w), providing a consistent demand floor for U.S. gas.

Recent declines in U.S. active gas rigs, with Baker Hughes reporting rigs down by 2 to 109 last week, may hint at a softening supply growth pace, but production remains resilient, limiting the bullish momentum’s scope unless exports increase further or domestic demand strengthens meaningfully.

Will Rising U.S. Power Demand Support Nat-Gas Bulls

Higher electricity output is a supportive factor, with the Edison Electric Institute reporting U.S. output rose +3.2% y/y in the latest week. Sustained strength in power generation could support summer nat-gas demand, partially offsetting cooling weather forecasts that could ease air conditioning load and slow inventory draws.

Market Forecast

Short-term, the outlook leans neutral to cautiously bullish as traders await EIA data for confirmation of tighter balances while monitoring weather impacts. A break above $3.463 could open the door toward the $4.000 handle if bullish catalysts align, while failure to hold $3.427 risks retesting $3.293 support. Traders should be prepared for two-sided trade while using today’s EIA release as a pivot for positioning.

More Information in our Economic Calendar.