Natural gas (NG) is currently struggling to find its footing, with the market swimming in supply and storage levels sitting comfortably above the five-year average. Not even the promise of sweltering summer temperatures has been enough to spark a meaningful rally, as traders are holding off, waiting for proof that air conditioning demand will actually materialize in July.
Make no mistake—the heat is still the market's best hope. Scorching US temperatures have already been pushing air conditioners into overdrive, which translates into stronger gas burn from power generators. The latest Energy Information Administration (EIA) print offered a ray of hope: inventories rose by 73 billion cubic feet—a sharp slowdown from the prior week's 108 billion cubic feet build. This is a sign that demand is beginning to eat into the surplus, and the pace of injections could ease further as the thermometer climbs. If weather forecasts keep calling for a sustained heat wave, natural gas might finally get the boost it has been waiting for.
However, supply remains the elephant in the room. The EIA projects US gas output to climb by roughly 3.3% in 2026, a reminder that production isn't showing any signs of letting up. Meanwhile, stockpiles are still standing above the five-year average, giving the market a comfortable buffer against any sudden demand bursts.
All in all, the fundamental picture for natural gas is bearish. While the heat provides a floor, bulging inventories and rising output keep a tight leash on any potential upside.
The final recommendation:
— Sell natural gas at the current price, targeting $3.00 within one month.
— To shield your position from adverse market movements, place a Stop Loss order just above the resistance level, at $3.35.
This content is for informational purposes only and is not intended to be investing advice.
