Natural gas prices remain under pressure near the $2.85 area after a sharp July selloff, with the latest U.S. Energy Information Administration report reinforcing the view that domestic supply remains comfortable. Working gas in storage increased by 41 Bcf, below market expectations of 44 Bcf and slightly below the five-year average build of 45 Bcf.
Total inventories climbed to 3,024 Bcf, leaving storage roughly 181 Bcf above the seasonal average. While the smaller-than-expected injection reflects stronger cooling demand, inventories remain sufficiently high to limit bullish momentum.
Heat wave offsets weaker LNG demand
Extremely hot weather across large parts of the Midwest and Eastern United States continues to support electricity demand for air conditioning, increasing gas consumption by power generators. However, this positive seasonal factor has been partly offset by weaker LNG feedgas demand as the Freeport LNG export terminal remains in scheduled maintenance through August. With lower export volumes, more natural gas stays in the domestic market, helping keep storage levels elevated and reducing the risk of an immediate supply squeeze.
Long-term fundamentals remain constructive
Although near-term conditions remain soft, the longer-term outlook has not materially deteriorated. The EIA continues to project record U.S. LNG exports over the next two years as new export capacity gradually comes online. Rising overseas demand, particularly from Europe and Asia, should steadily increase U.S. gas exports and tighten the domestic supply balance once temporary maintenance work is completed. At the same time, recent U.S. inflation data have reinforced expectations that the Federal Reserve could adopt a less restrictive policy stance later this year, improving the broader environment for energy demand.
Technical picture keeps bears in control
The hourly chart shows Natural Gas attempting to stabilize after finding support near the $2.80 area. Even so, prices continue to trade below the short, medium and long-term moving averages, confirming that the broader technical trend remains bearish. Initial resistance is located near $2.90, followed by the psychological $3.00 level. A sustained move below $2.80 could expose the $2.75 and $2.70 support zones. As I noted previously in Natural gas struggles to recover as ample supply caps upside, periods of weakness may continue to attract buying interest from longer-term investors, but the broader trend is unlikely to improve until prices reclaim the key resistance area around $3.00.
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