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Since April 28, natural gas has held firm above its 200-day moving average, triggering a short-covering rally. The successful defense of $3.103 as a technical floor has strengthened bullish sentiment, and the current rally has enough momentum to test the $3.733 pivot. A decisive break above this level could drive a run toward the 50-day moving average at $3.966. However, if sellers step in near $3.733, a near-term cap could develop.
How Did the Latest Storage Data Move the Needle?
Thursday’s EIA storage report showed a build of +107 Bcf, near the high end of analyst estimates and well above the five-year average of +58 Bcf. The injection, driven by mixed weather—cooler in the Plains and Rockies, warmer elsewhere—erased the prior deficit and brought total storage to 2,041 Bcf, slightly above the five-year average. Regional breakdowns show inventories remain significantly below last year, especially in the East and Midwest, which are down 21.7% and 24.4%, respectively, year-over-year.
Will Light Weather Demand Stall the Rally?
From May 1–7, national demand is expected to remain weak. Most of the U.S. will experience mild spring weather, with highs in the 60s–80s and only localized cooling in the Midwest and Plains due to storm systems. The South will see some 90s, but overall, limited heating and cooling demand is expected. This could temporarily dampen upward momentum if weather-driven consumption fails to provide follow-through.
How Could Trade Tensions with Canada Disrupt Supply and Pricing?
Traders are also monitoring U.S.-Canada natural gas flows as potential tariffs threaten to impact bilateral supply. A proposed 10% import tariff on Canadian gas, if enacted after July, could constrain Northeast U.S. markets, where cross-border flows are more balanced. Canada’s new Prime Minister, Mark Carney, has threatened reciprocal tariffs, raising the risk of price volatility, especially in spot and cash markets during peak demand events.
Market Forecast: Bullish with Caution
Short-term sentiment leans bullish given the strong technical setup and robust storage build that confirms seasonal injection trends. However, weak demand in the near term and trade uncertainties could introduce volatility. Traders should watch the $3.733 level closely—acceptance above it could extend gains toward $3.966, but failure to break could trigger a pullback.
More Information in our Economic Calendar.
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