Natural gas has stabilized after a sharp July decline, but the fundamental backdrop remains challenging for bulls. The latest U.S. inventory data showed another larger than seasonal storage build, keeping working gas inventories comfortably above the five-year average.
At the same time, maintenance at the Freeport LNG export terminal has temporarily reduced export demand, increasing the amount of gas available in the domestic market and limiting the potential for a stronger rebound.
Weather outlook offsets geopolitical support
Hot summer temperatures continue to support electricity demand for air conditioning, but updated weather forecasts suggest that cooling demand could ease later this month across large parts of the U.S. Meanwhile, geopolitical tensions in the Middle East have lifted global energy prices and increased volatility in European gas markets because of concerns over LNG flows through the Strait of Hormuz. However, those risks have had only a limited impact on U.S. natural gas prices thanks to comfortable domestic supply conditions.
Technical picture remains cautious
The hourly chart shows Natural Gas attempting to stabilize after a steep selloff toward the $2.85 area. A modest rebound has developed, but prices remain below the short, medium, and long-term moving averages, indicating that bearish momentum has not yet been fully reversed. Unless buyers reclaim the nearby resistance zone around $2.95 to $3.00, the current recovery is likely to remain a corrective bounce rather than the beginning of a sustained uptrend.
Storage and LNG remain the key catalysts
Looking ahead, traders will closely monitor the next EIA storage report, updates on LNG export activity, and changes in U.S. weather forecasts. While the EIA still expects natural gas demand from the power sector to remain historically strong, above-average inventories are projected to persist through much of the injection season, limiting upside pressure on prices unless supply tightens or LNG demand accelerates after maintenance is completed.
As I noted in the article Natural gas extends decline as storage surplus offsets geopolitical risk, NATGAS may continue to move lower in the near term.
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