Daily Natural Gas

Price action on Monday suggests the $3.200–$3.238 zone is acting as a firm ceiling. A decisive move above $3.238 could open the door for short-covering and fresh long entries, potentially targeting the longer-term pivot at $3.579. However, failure to hold near current levels raises the risk of a downside move toward the pivot at $2.947—a key support from the new $2.695–$3.198 trading range. A break below that could trigger heavier selling.

Cooler Weather Forecasts Trim Demand Expectations

Weather remains a headwind for bulls. NatGasWeather reports below-normal degree day totals through the next five days, transitioning to near-normal for the 6–15 day period. Despite persistent heat in the South, much of the northern U.S. will see mild temperatures in the 60s–80s, contributing to an overall low demand outlook for the next week. Cooler revisions for the Northeast and Southwest between September 10–19 further dampen expectations for late-season cooling demand.

Rising Production and Soft Electricity Demand Add Pressure

Bearish fundamentals are building. U.S. dry gas production hit 108.2 Bcf/day on Friday, up 5.6% year-on-year, with active rigs holding near a two-year high. LNG feedgas flows remained solid at 15.2 Bcf/day, but domestic gas demand lagged at just 74.4 Bcf/day, down 3.7% year-on-year. Additionally, U.S. electricity output fell sharply by 7.82% for the week ending August 30, according to the Edison Electric Institute—a sign of waning power sector consumption.

Inventory Data Signals Comfortable Supply Cushion

Storage data remains neutral to bearish. Last week’s EIA report showed a +55 Bcf build—inline with expectations but above the 5-year average of +36 Bcf. Inventories are 5.6% above the seasonal norm, reinforcing that the market is well-supplied despite slightly tighter year-on-year levels. European storage stood at 78% full as of September 1, trailing the 5-year average of 85%, but still adequate for now.

Market Forecast: Bearish Bias Below $3.200

With weather cooling, production running strong, and storage healthy, the near-term bias remains bearish unless futures can push convincingly through $3.238. A break below $2.947 could accelerate selling, while sustained trade below $3.200 suggests sellers remain in control. Traders should watch for confirmation at key technical levels before committing to directional exposure.

More Information in our Economic Calendar.