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Is the EIA Storage Report Signaling Oversupply?
Last week’s EIA report showed a 110 Bcf injection, precisely on expectations but significantly above the five-year average of 83 Bcf. Total inventories have now reached 2,255 Bcf, standing 2.6% above seasonal norms. While not extreme, the surplus reflects a well-supplied market with little evidence of tightening in the near term. With temperatures unlikely to create meaningful demand spikes, any bullish catalyst from storage draws appears distant.
Production Holding Steady as Demand Slips
Supply-side pressures remain intact. Lower 48 dry gas production averaged 105.5 Bcf/d last week, up 4.7% year-over-year. Meanwhile, daily demand on Friday was just 67.3 Bcf/d, down 1.6% from a year ago. LNG feed gas flows are holding around 14.7 Bcf/d, offering steady export support, but not enough to counterbalance the domestic supply glut. Additionally, the Edison Electric Institute reported a 2.8% y/y decline in power output for the week ending May 10, further reinforcing weakness in electricity-driven demand.
Will Key Technical Levels Trigger a Steeper Selloff?
Natural gas futures are now testing the 200-day moving average at $3.158 and flirting with a drop below the critical $3.035 level. A clean break beneath April’s low could open the door to $2.376, signaling a deeper correction. With four straight weekly losses and no sign of immediate demand strength, momentum continues to favor bears.
Market Forecast: Bearish with Downside Risk Growing
The near-term outlook remains bearish, with spring weather undercutting demand, storage levels rising, and production staying elevated. Unless a surprise in upcoming EIA data or a heat-driven demand spike materializes, prices appear poised for further downside. Traders should watch closely for a break of the $3.035 support, which could accelerate selling pressure toward $2.37.
More Information in our Economic Calendar.
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