Despite a three-day slide, buyers appeared near the 200-day moving average, sparking intraday short-covering rallies. However, each bounce has been met with renewed selling interest, confirming a “sell the rally” pattern. Technical resistance remains layered between $3.791 and $3.859, but a true trend reversal would require a close above the 50-day moving average at $3.900. Unless that threshold is breached, upward momentum remains limited.
Did the EIA Storage Report Tip the Market Bearish Again?
Thursday’s EIA report added bearish weight. Working gas in storage increased by 122 Bcf for the week ended May 30, well above consensus estimates of +113 Bcf and the five-year average injection of +98 Bcf. Total stocks now stand at 2,598 Bcf, up 4.7% versus the five-year norm and down 10% year-on-year. Regionally, the Midwest and South Central posted notable builds, reflecting strong injections in the nonsalt storage category. The data points to more than adequate supply levels heading into the heart of summer demand season.
Will Weather and Demand Trends Support a Recovery in Prices?
According to NatGasWeather, models show pockets of supportive demand. NatGasWeather forecasts warm to hot temperatures across the South, Southwest, and California, with highs reaching the 90s and 100s. However, large parts of the Midwest and Ohio Valley remain cooler, leading to only moderate overall demand through June 11.
On the supply side, dry gas production stood at 105 Bcf/d on Thursday, up 3.1% year-over-year, while total Lower-48 demand was down 2.7% to 70.4 Bcf/d. LNG feedgas flows fell to 13.4 Bcf/d, down 6.4% week-over-week, further softening the bullish case.
What’s the Trading Outlook from Here?
Given the failure to generate lasting upside momentum despite oversold conditions and heat-driven demand pockets, the bias remains slightly bearish heading into next week.
The 200-day moving average at $3.556 is the near-term line in the sand. A firm breakdown below this level would confirm a longer-term bearish shift. Until prices can reclaim the 50-day MA at $3.900, rallies are likely to be sold.
