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EIA Storage Data Sparks Bearish Momentum—Is $3.00 the Next Test?
The latest storage report from the U.S. Energy Information Administration (EIA) showed a 120 Bcf injection for the week ending May 16, far exceeding the five-year average of +87 Bcf. Total working gas in storage now stands at 2,375 Bcf—333 Bcf below last year but 90 Bcf above the five-year norm. The rapid inventory build continues to pressure prices, especially as it reflects mild weather conditions and surging renewable output, with solar generation reaching record highs last week.
A break below the 200-day moving average could open the door to a test of the recent lows at $3.098 and $3.035. If the latter level fails to hold, traders may see increased volatility with downside momentum accelerating toward lower support zones.
Permian Spot Prices Flash Red as Production Stays Elevated
Adding to the bearish tone, spot prices in the Permian Basin turned negative—an indication of regional oversupply and limited takeaway capacity. National production remains firm, hovering above 105 Bcf/d, sustaining the pressure on both regional and benchmark pricing.
With production steady and infrastructure constraints persisting, localized price collapses are feeding into broader market sentiment. Traders will continue watching for signs of either a production slowdown or stronger demand signals, neither of which appear likely in the near term.
Mild Weather Forecast Caps Near-Term Demand Outlook
Weather remains a key drag on natural gas demand. The latest seven-day forecast shows below-average temperatures across the Midwest and East, with widespread highs in the 50s to 70s and pockets of even cooler air. While the West and South remain hot, strong solar penetration is offsetting gas-fired generation. As a result, national demand is expected to remain light, reducing the chances of a bullish catalyst in the short term.
Bearish Setup as Technical and Fundamental Pressure Builds
With inventories building rapidly, demand staying soft, and technical indicators pointing to a potential breakdown, the short-term outlook leans bearish. If futures breach the $3.176 support, downside targets at $3.098 and $3.035 come into play. Unless rallies can overcome resistance at $3.438 and the 50% retracement near $3.733, traders should prepare for continued weakness in the near term.
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