U.S. natural gas prices have experienced a slight decline as investors anticipate the upcoming storage report from the U.S. Energy Information Administration (EIA). Although a cooling in weather later this month is expected to potentially increase demand, current demand remains moderate. Traders are preparing for a bearish inventory report, which could exert additional downward pressure on prices in the short term.
Key technical levels indicate that natural gas futures are nearing a pivotal resistance point, with a pivot at $3.044 and the 50-day moving average at $3.051. A breach beyond this range may trigger a stronger upward trend. Conversely, immediate support is at $2.825, marking a threshold for potential further declines. A sustained breakthrough above the resistance zone could attract new buying interest, while a drop below $2.825 may signal further weaknesses.
The EIA report is expected to show an increase in storage, with consensus predicting U.S. inventories to exceed the average, estimated between 41 to 44 billion cubic feet (Bcf), surpassing the five-year seasonal average increase of 29 Bcf. This would add to already high inventory levels, potentially exerting short-term pressure on prices, especially given the current limited demand. While recent reductions in U.S. natural gas production are favorable for prices, expected storage injections and a continued mild weather outlook present challenges to sustained price increases.
According to NatGasWeather, temperatures are forecasted to drop in the western and northern U.S. by November 20, with increased rain and snow potentially boosting regional heating demand. However, the southern and eastern U.S. will continue to experience temperatures between 60 to 80 degrees, keeping demand subdued in major population centers. Overall, demand for the next seven days is expected to remain light, despite potential growth later in November as cooler weather approaches.
In the near term, U.S. natural gas prices face downward pressure due to the expected storage build and persistent mild temperatures across much of the country. However, if colder weather later in the month accelerates heating demand, combined with stable liquefied natural gas export demand, it could set the stage for a bullish reversal. Traders should closely monitor the resistance levels of $3.044 to $3.051, as breaking this range may trigger upward momentum, while a fall below $2.825 could indicate further bearish trends ahead.
