Natural Gas Futures Reverse Sharply After Failing at $3.107, Demand Outlook Darkens

Natural gas futures reversed course sharply Wednesday after June NYMEX contracts briefly touched $3.138, the highest since late March, then sold off to close at $3.004—down 11.0 cents, or 3.53%, in what technicians will read as a closing price reversal top. The contract had drawn bullish momentum through last week, settling at $2.961 the prior Friday after clearing the 50-day moving average at $2.943, a gain of more than 7% on the week. The move higher had been built on three converging factors: hotter-than-expected weather forecasts for late May, a tighter-than-expected storage build, and constrained LNG supply from seasonal maintenance at export facilities. When the weather picture shifted Wednesday, the bid evaporated. NatGasWeather projected Lower-48 demand dropping from 79.5 billion cubic feet per day to 71.6 billion cubic feet per day as cooler air spreads across the Plains, Midwest and Texas heading into the Memorial Day weekend. The eastern U.S. is still expected to see above-normal temperatures—mid-80s to low-90s from May 25-29—generating early air conditioning load for a shoulder-season period that normally carries modest demand. But the broader national cooling undercut the bullish weather case. Storage adds pressure. Thursday's EIA report for the week ending May 15 was expected to show an injection of 96 to 98 billion cubic feet, above the five-year average of 92 billion cubic feet. That would follow last week's 85 billion cubic foot build, which came in below the 91 billion cubic foot consensus but provided only brief support. Inventories stand 1.6% above year-ago levels and 6.5% above the five-year seasonal average—surpluses that keep a ceiling on any weather-driven rally. On the supply side, Lower-48 dry gas production is running at an estimated 109.3 billion cubic feet per day, up 1.4% from a year ago and close to record levels. LNG exports are estimated at 17.8 to 18.1 billion cubic feet per day, with maintenance work at export facilities limiting feedgas demand and effectively returning supply to the domestic market. The technical setup now favors the downside. A trade through $2.985 would confirm Wednesday's reversal and expose the 50-day moving average at $2.923, then the retracement zone between $2.865 and $2.800. The trailing 50% support sits at $2.819. Bulls need to reclaim $3.107 on volume—and hold it—before targeting $3.419, the midpoint of the broader $3.622-to-$2.592 range, with the 52-week moving average at $3.540 above that. Thursday's EIA print is the near-term test. An injection at or above 98 billion cubic feet reinforces selling pressure and likely tests the 50-day moving average before the weekend. The more consequential input is weather model updates through early June: if the heat pattern over the eastern U.S. verifies and extends, injection rates will slow and the storage surplus will narrow, giving bulls a second chance at $3.107. If models flip cooler, the $2.80-$2.86 zone becomes the next destination.