U.S. natural gas futures fell on Thursday morning, moving below a key technical level and approaching the important 200-day moving average. Traders are cautious ahead of a government storage report that could add more downward pressure on prices.
At 13:46 GMT, natural gas futures were trading at $2.894, down $0.128 or 4.24%. Prices are now close to the 200-day moving average at $2.904, a widely watched indicator for long-term trends. If prices fall sharply below this level, it could lead to faster selling, possibly pushing the market toward $2.199. Although a brief technical rebound could happen at first contact with this support, current signals suggest the market is leaning lower.
Storage Report Could Add More Pressure
Investors are waiting for the U.S. Energy Information Administration’s (EIA) weekly inventory report. Analysts expect a +70 billion cubic feet (Bcf) injection for the week ending April 18, compared to the five-year average build of +58 Bcf. This would be a significant change from last week’s bullish build of just +16 Bcf. A larger-than-expected injection could weaken market sentiment further, especially with prices already showing technical weakness.
Tight Supply, But Momentum Fading
Despite the recent drop, supply remains relatively tight. As of April 11, U.S. natural gas inventories were down 20.9% compared to last year and 3.9% below the five-year average. However, traders are currently more focused on short-term trends in storage rather than long-term supply concerns. Meanwhile, European gas storage is at 37% full, below the usual 48% for this time of year. This could support demand later, but not enough to boost prices in the near term.
Short-Term Outlook: Bearish Until Support Holds
The short-term outlook remains negative unless futures can move back above the 61.8% Fibonacci retracement level at $2.995. A move above could trigger short-covering, but without strong fundamentals or technical support, any rally may be brief. Traders are now watching closely to see if the 200-day moving average can hold or if prices will break lower.
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