Natural Gas Price Drops to $3.57 as Weak Demand and High Supply Weigh on Market

Natural Gas Retreats to $3.57 as Sellers Regain Control and Seasonal Weakness Pressures Prices

Natural Gas (NG=F) slipped 2.93% to $3.57, extending a three-day losing streak as traders reacted to soft demand signals, muted weather-driven consumption, and a lack of fresh LNG export catalysts. The decline pushed prices further below the $3.60 psychological threshold, with sellers defending key resistance levels amid persistent bearish undertones.

The early session saw a brief attempt to stabilize above $3.62, but selling pressure accelerated after midday, driven by thin speculative interest and a continued retreat in heating degree day forecasts for August. Technical momentum indicators have shifted bearish, with the Relative Strength Index (RSI) easing toward the mid-40s, signaling a pullback without yet entering oversold territory.

Technical Picture Points to $3.50 and $3.42 as Key Downside Zones

Short-term price action confirms a failure to reclaim the 20-day EMA at $3.64, keeping sellers in control. Immediate support rests at $3.50, a level that coincides with the lower bound of the July consolidation channel. A decisive break beneath this area would expose the $3.42 support, aligning with the 50-day EMA, followed by deeper downside potential toward $3.30 if broader commodity weakness persists.

On the upside, natural gas must clear $3.64 before challenging $3.70, where sellers have repeatedly capped rallies since early August. The 100-day EMA near $3.74 adds another barrier, making sustained upside progress difficult without a fundamental shift in demand or a supply disruption.

Fundamental Headwinds: Weak Seasonal Demand and LNG Timing Lag

The current seasonal window remains unfavorable for natural gas bulls, with cooling demand failing to spark major power generation surges and heating demand still months away. LNG exports — a key structural driver of U.S. gas markets — are expected to strengthen into winter, but August flows remain stable near 13.2 billion cubic feet per day, offering little immediate upside push.

European storage facilities are near 89% capacity, reducing urgency for spot cargo purchases. Meanwhile, U.S. production remains robust above 102 Bcf/d, leaving domestic inventories on track to exceed the five-year average by 7% ahead of the peak heating season.

Bearish Momentum in Control Until Weather or Exports Shift the Trend

With both technical and fundamental factors aligned against a sustained rebound, NG=F faces a challenging path higher in the near term. A break below $3.50 could trigger algorithmic selling toward $3.42, while a strong heat wave or early-season cold snap would be required to disrupt the current supply-demand balance. Until then, the market remains in a seller-dominated range.

Buy/Sell/Hold Verdict: SELL — Momentum favors sellers, with the probability skewed toward a retest of $3.42 and potentially $3.30 unless LNG demand accelerates ahead of schedule or weather shocks emerge.

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