Bearish EIA Inventory Report Threatens $3.00 Support Today

Key Points:

Bearish Storage Report Threatens Critical $3.00 Support

Natural gas futures are trading lower on Thursday after the release of a bearish government storage report. The market is now a threat to challenge the psychological $3.00 level. A successful breach of this level will open the door to a test of a multi-month target at $2.770.

At 16:27 GMT, February Natural Gas Futures are trading $3.065, down $0.055 or -1.76%.

Key Resistance Levels Cap Any Recovery Attempts

The nearest swing chart resistance is $3.499, followed by $3.634. Short-covering could take out these levels at some point in the future, but any rally is likely to be stopped by the intermediate trend indicator or 50-day moving average at $4.010, or the long-term trend indicator, the 200-day moving average at $4.263.

With the trend decisively lower, the market should remain in "sell the rally mode" until the 200-day moving average is overcome with conviction.

EIA Data Shows Storage Levels Well Above Historical Norms

According to the U.S. Energy Information Administration (EIA), "Working gas in storage was 3,185 Bcf as of Friday, January 9, 2026. This represents a net decrease of 71 Bcf from the previous week. Stocks were 33 Bcf higher than last year at this time and 106 Bcf above the five-year average of 3,079 Bcf. At 3,185 Bcf, total working gas is within the five-year historical range."

Weak Withdrawal Reflects Warm Weather Impact on Demand

Ahead of today's weekly storage report, surveys suggested a draw of 87 to 91 Bcf, lighter than the 5-year average of -146 Bcf. Temperatures were much warmer than normal over most of the U.S. for the sample week, while wind generation was only slightly changed, according to NatGasWeather.

Short-Term Cold Shot Forecast, But Limited Price Impact Expected

NatGasWeather's latest forecast suggests moderate demand between January 15–21. They see "frosty" air advancing across the Midwest and East the next few days with highs of 10s to 40s, lows of -0s to 30s for stronger national demand.

Late this weekend and into early next week, the northern U.S. is expected to experience a more impressive cold shot, including lows of 20s–30s into Northern Texas, the South, and Southeast. It will be mild in the West.

Elevated Inventories Limit Bullish Potential Despite Cold Weather

Looking ahead, looking at the words used by the weather forecasters, the upcoming cold is expected to be a short-term event, hence the phrase "cold shot." This is probably why we are seeing a limited reaction to the upcoming cold. Furthermore, the storage levels are just too high to support a meaningful rally and are headed in the wrong direction for the bulls.

EIA Projects Bearish 2026 Outlook Before 2027 Recovery

Yesterday, the EIA's short-term report also predicted a bearish outlook for prices in 2026, before a bullish rebound next year.

Source: FX Empire