Natural Gas Futures Struggle as Selling Pressure Mounts

In a troubling turn of events for natural gas traders, U.S. futures are struggling to find footing early this Monday. The market sentiment is decidedly bearish, with prices trapped below the pivotal 200-day moving average of $3.085, indicating that sellers are firmly at the helm as we inch closer to the May contract expiration.

As of 13:04 GMT, natural gas futures were hovering around $3.076, reflecting a drop of $0.038 or 1.22%.

Is Weak Demand Behind the Price Plunge?

Natural gas futures have entered a downward spiral, experiencing a relentless ten-session decline. The mild temperatures typical of the shoulder season and a sluggish demand landscape are contributing to this prolonged downturn.

Production rates remain unchecked, with output from the Lower 48 states reaching an impressive 104.4 billion cubic feet per day (Bcf/day) on Friday, marking a 3.8% increase from last year. On the flip side, demand for gas in these same regions plummeted to 66.8 Bcf/day, a staggering 7% drop year-over-year.

Adding to the woes, LNG exports are lagging behind, standing at 15.3 Bcf/day—a 3% decline from the previous week. This stark mismatch between supply and demand continues to keep prices under relentless pressure.

Storage Data: A Mixed Signal for Traders

Recent data from the EIA reveals an unexpected storage build of 88 Bcf for the week ending April 18, surpassing analyst expectations of 75 Bcf and exceeding the five-year average build of 58 Bcf. Although total working gas in storage is now at 1,934 Bcf—44 Bcf below the five-year average—it's still within historical norms.

Notably, while the year-over-year supply situation seems tighter—down 20.2% compared to last year—the unexpectedly significant injection coupled with continued mild weather is maintaining pressure on futures.

What’s Next for Traders?

Traders are closely monitoring pivotal levels in the market. Natural gas prices are likely to remain under significant pressure in the short term, with sellers poised to maintain control. A sustained dip below the $3.00 mark could trigger a deeper plunge toward support levels around $2.376. Until we see a noticeable increase in demand or a significant cut in production, any potential rallies are expected to be constrained and short-lived.

Stay informed as the market continues to evolve. The future of natural gas is looking uncertain—will demand pick up, or are we in for a deeper price meltdown?