Natural Gas Price - NG=F Climbs to $2.94 on Short-Covering as +75 Bcf Storage Build Caps Rally

Natural Gas (NG=F) rebounds toward $2.94 as traders digest storage and supply data

Natural Gas (NG=F) futures clawed back from Tuesday’s $2.772 low, the weakest print since late August, to trade around $2.94, up more than 2.6% on the session. The recovery came just ahead of the EIA’s weekly storage update, where inventories rose by +75 Bcf for the week ending September 19, nearly in line with consensus of +74 Bcf and slightly below the five-year norm of +76 Bcf. This report confirmed stocks remain heavy, with inventories 6.1% above the five-year seasonal average and 0.5% higher year-on-year, underscoring persistent oversupply even as futures rebound.

Short-covering and technical buying drive the latest bounce

The current rally has been fueled by short-covering as prompt-month contracts climbed within a retracement zone between $2.887 and $2.947. The pivot at $2.947 has become a battle line for bulls, with a decisive break opening the path toward the 50-day moving average at $3.05. However, failure to sustain above $2.947 risks a reversal, with downside targets at $2.887 and deeper at $2.772, where the market found support earlier this week. The technical backdrop highlights a tug-of-war between speculative buying and bearish fundamentals.

Production remains near record highs despite seasonal demand shifts

Supply-side pressure is unmistakable. U.S. dry gas output stood at 107.7 Bcf/day this week, up 6.1% year-on-year, keeping production close to record levels. The EIA has lifted its 2025 forecast to 106.63 Bcf/day, compared with 106.40 Bcf/day just a month earlier. Active rigs sit at 118, only slightly off the two-year high of 124. This resilience in drilling activity, despite months of depressed prices, reinforces the structural oversupply narrative.

Weather patterns give temporary support but fail to shift fundamentals

Weather forecasts project lingering warmth across the central and southern U.S., with highs in the 80s and 90s stretching into early October. This should extend cooling demand slightly, but national consumption is still rated as low by NatGasWeather. U.S. demand on Thursday measured 73.2 Bcf/day, only 0.8% higher year-on-year, while LNG feedgas flows came in at 15.7 Bcf/day, marginally higher week-on-week. With European storage levels at 82% full, below the five-year norm of 89%, the global backdrop is not tight enough to counterbalance U.S. oversupply.

Power generation and exports provide modest tailwinds

Support came from the Edison Electric Institute, which reported U.S. electricity generation up +2.3% year-on-year for the week ending September 20. Over the past 52 weeks, output rose +2.85% to 4.27 million GWh, suggesting a steady baseline of gas demand for power burn. Meanwhile, cross-border flows show volatility: U.S. pipeline exports to Mexico, which hit records in summer, slipped in September due to pipeline constraints. Yet they remain in the 7–8 Bcf/day range, giving U.S. producers a consistent export outlet despite localized price swings at hubs like Waha.

Market outlook: resistance at $2.947 critical for sentiment

The natural gas market sits at a critical inflection point. A breakout above $2.947 would open the door to $3.05 and potentially $3.10, where upside acceleration could materialize. But unless storage builds sharply undershoot expectations in coming weeks, supply-heavy conditions will keep rallies contained. If prices slip back below $2.887, bears will regain control, pushing contracts toward the $2.77 floor. The combination of record production, near-average storage builds, and only modest weather-driven demand keeps the near-term bias tilted bearish despite today’s bounce.

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