Natural Gas Futures Break 50-Day Moving Average After EIA Storage Miss
October natural gas futures jumped 3.2% after the EIA reported a 15 Bcf storage build, less than half the seasonal average, breaking above the 50-day MA for the first time since July.
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October natural gas futures jumped 3.2% Thursday after the EIA weekly storage report showed a 15 Bcf build, less than half the five-year average of 33 Bcf. The contract settled at $2.966, its highest level since late July.
The build was the first this summer to come in below expectations despite hot weather, traders said. Previous weekly reports had matched or exceeded forecasts even as temperatures climbed. The 15 Bcf injection also missed the market consensus of 17-20 Bcf.
Total working gas stood at 3,184 Bcf, down 30 Bcf from a year earlier but still 167 Bcf above the five-year average. The surplus is shrinking during the weeks when it normally grows fastest, traders noted.
Heat across the southern U.S. drove air-conditioning demand, pulling gas to power plants. LNG feedgas volumes are recovering as Gulf Coast maintenance winds down. European storage sits at 63% full, 18 percentage points below the five-year average, with winter approaching and Hormuz Strait disruptions limiting Middle East cargoes. U.S. exports are filling part of that gap.
Lower-48 dry gas production remains elevated, providing a bearish counterweight. Thursday's report showed that even with high output, the combination of heat and LNG demand produced a build far below normal.
October futures broke above the 50-day moving average at $2.937, a level that had capped rallies since July 8. The next resistance zone sits at $3.044 to $3.133, the 50% to 61.8% retracement of the $3.420 to $2.668 range, traders said.
Natural gas and crude had fallen Wednesday on reports that Iran and Oman were discussing a transit deal that could ease Hormuz tensions. Thursday's storage data reversed that move.
The next EIA storage report will carry added weight, traders said. Heat forecasts remain in place. LNG demand is firming. European storage deficits persist. The 15 Bcf build was the first to confirm the demand-side tightening that weather and exports had been signaling all summer.
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