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Natural Gas Tests $2.97 Resistance as Heat Wave Collides With EIA Storage
August natural gas futures test $2.974 resistance ahead of EIA storage report as central U.S. heat wave meets supply surplus that has capped every summer rally.
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Natural gas futures pushed into the upper end of their summer range Thursday morning, with the August contract trading at $2.957 ahead of the EIA storage report at 14:30 GMT. The move followed a Wednesday recovery after the Commodity Weather Group shifted its outlook hotter for July 27 through July 31, calling for above-normal temperatures across the central United States.
NatGasWeather projected widespread highs in the upper 80s to 100s, with some readings above 110 degrees through July 27. ERCOT, the Texas grid operator, already broke load records this week. Cash prices strengthened across the West on Wednesday, a sign the heat is reaching physical demand and not just sitting on a weather model.
Storage remains above the five-year average. Production has not slowed. The supply overhang has capped every rally this summer. The heat needs to hold into August and spread to the Midwest and East for futures to build sustained upward momentum, traders said.
Lower-48 dry gas demand hit 80.6 billion cubic feet per day on Wednesday, up 6.3% from a year earlier. Electricity output rose 2% year over year in the week ended July 18. Cooler interruptions in the Midwest, Great Lakes and Northeast are keeping the national demand picture from aligning fully with the central U.S. heat.
On the supply side, Lower-48 dry gas output reached 110.9 Bcf/d Wednesday, up 2.5% from a year ago. The EIA raised its 2026 production forecast to 111.2 Bcf/d earlier this month. The rig count held at 126 last week, down from February's 134-rig high, so a fresh production surge is not showing up. Current output is still enough to keep the supply argument alive, analysts said.
LNG net flows to U.S. terminals hit 17.9 Bcf/d Wednesday, up 7.9% from the prior week. That is pulling gas out of the domestic market. Tropical Storm Bertha is the short-term wildcard: any disruption to Gulf Coast export facilities would leave more gas at home and could turn a weather rally into another storage build quickly, traders noted.
The EIA is expected to report a 29 Bcf build for the week ended July 17, against a five-year average of 30 Bcf. Last week's report added 41 Bcf versus a 39 Bcf estimate. Inventories were down 0.9% from a year ago but still running 6.4% above the five-year seasonal average as of July 10.