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Natural gas futures have seen six consecutive sessions of lower lows, slipping to a five-month low on Tuesday. Price action is now centered around the 61.8% retracement level at $2.995, which has held for three sessions. More importantly, the 200-day moving average at $2.902 is seen as the final line of defense before a potential drop toward $2.199. Without fresh buying or profit-taking, traders may struggle to hold this level, especially as the market lacks supportive fundamentals.
Warm Weather Erodes Demand, Pressures Inventories
Forecasts from the Commodity Weather Group suggest continued warmer-than-normal temperatures across the Midwest and East through early May. This pattern has sharply reduced heating demand, translating into lower consumption levels. On Tuesday, Lower-48 gas demand dropped to 66.1 bcf/day, down 5.2% year-over-year, while production remains high at 104.9 bcf/day. Storage injections are beginning to reflect the imbalance—last week’s EIA report showed a smaller-than-expected build of +16 bcf, but demand remains too light to absorb current supply levels.
Power Sector and LNG Exports Offer Some Support
Electricity generation continues to rise, which is a modestly supportive factor for natural gas. U.S. power output rose 6.4% year-over-year in the week ending April 12. LNG exports remain steady at 15.6 bcf/day, and policy shifts could boost demand further down the line. The Biden administration’s earlier pause on LNG export approvals was lifted, potentially unlocking over a dozen new projects. Still, these developments are long-term in nature and offer limited short-term price support.
Outlook: Bearish Unless Key Support Holds
In the short term, the path of least resistance remains to the downside. Unless the 200-day moving average provides a firm technical floor, selling pressure could intensify with $2.199 as the next major target. A meaningful rally will likely require a shift in weather patterns or a surprise demand-side catalyst—neither of which is on the immediate horizon. For now, traders should stay cautious and watch support levels closely.
More Information in our Economic Calendar.
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