Natural gas steadies after rebound as tighter storage build offsets demand concerns
Natural gas has stabilized after rebounding from recent lows near $2.67, yet the broader technical picture remains cautious. The hourly chart shows buyers defending support around the $2.70 area, but prices continue to trade below the major moving averages, suggesting that rallies are still being viewed as corrective rather than the start of a sustained uptrend.
Initial resistance is developing near $2.80 to $2.85, while a failure to hold above $2.70 would expose the market to another test of recent lows.
The latest EIA storage report provided a modest bullish surprise. U.S. working gas inventories increased by 28 Bcf, below market expectations of around 38 Bcf, suggesting stronger cooling demand and tighter supply than traders had anticipated. Total inventories remain comfortably above the five year average but below last year's level, limiting concerns about an excessive storage surplus heading into autumn.
Weather and LNG flows remain key drivers
Weather forecasts continue to play a dominant role in price action. Persistent heat across large parts of the United States is supporting power demand for air conditioning, while expectations for above normal temperatures during the first half of August could slow the pace of storage injections. At the same time, LNG export demand remains firm, helping balance the domestic market despite healthy production levels.
Geopolitical developments also remain an important wildcard. Renewed military escalation in the Middle East continues to create uncertainty for global energy markets and LNG shipping routes. Although U.S. natural gas production has not been directly affected, any disruption to LNG supply chains or additional pressure on key maritime corridors could tighten the global gas market and increase volatility.
Technical outlook remains cautiously bearish
From a technical perspective, natural gas is attempting to build a short term base, but confirmation is still lacking. Buyers need a sustained move above the $2.80 to $2.85 resistance zone to improve the near term outlook and target the $2.90 to $3.00 area. Until then, as I warned in Natural gas remains under pressure as traders await EIA storage report, the broader trend continues to favor sellers, and renewed weakness below $2.70 could trigger another decline toward $2.65 and potentially lower as bearish momentum remains dominant.
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