Natural Gas News: Prices Rise Slightly as Traders Eye Upbeat EIA Report

Bullish sentiment increases amid storage utilization expectations

On Wednesday, natural gas futures rebounded after a brief period of weakness, driven by expectations of an upbeat storage report. The possibility of a rare storage draw in mid-summer has increased market activity and suggests a tightening of market equilibrium. That optimism is reflected in the recent rally, which is supported by an increase in bullish sentiment among asset managers, who have increased their net long positions to a six-week high. The unwinding of short positions and forecasts for rising cooling demand in the continental 48 states have attracted new buyers to the market.

Expected EIA report could signal market tightening

Today’s EIA report is critical. A variety of survey estimates forecast a storage change of between 0 and 9 Bcf, with most analysts leaning toward a minimal build of 0-1 Bcf. However, some forecasts suggest a potential drawdown of -1 Bcf, which would reduce the current +423 Bcf surplus to about +380 Bcf. This expected drawdown is due to higher cooling degree days (CDDs) and lower wind energy generation, which has increased natural gas demand, according to NatGasWeather.

Hot weather in key regions is expected to lead to strong demand

Weather remains a key factor, with forecasts from NatGasWeather indicating strong demand through the weekend. High pressure systems in the western, central and southern U.S. are expected to maintain temperatures between 86 and 90 degrees Fahrenheit, driving significant demand. The Midwest, Ohio Valley, Great Lakes and Northeast, meanwhile, will see lower demand due to cooler weather systems.

Bullish momentum is building: are prices ready for a breakout?

Current market conditions suggest a bullish outlook for US natural gas futures. The combination of expected strong demand, potential storage draws and optimistic trader sentiment should drive prices higher in the near term. If the EIA report confirms a storage draw, this could further support an uptrend, with the next technical target at $2.461.

Technical Analysis