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

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.