The EIA report marks the first summer decline since July 2016 and the first August decline since 2006, reflecting increased cooling needs during extreme summer temperatures. Despite this optimistic indicator, traders remain cautious, as weaker demand is possible due to milder weather conditions.
Investment and geopolitical challenges are emerging
The outlook for the natural gas market is further complicated by weak investment and ongoing geopolitical tensions. Reduced capital spending in the industry has stalled the development of new projects, while supply chain disruptions and risks from conflict in Ukraine and the Middle East continue to pose challenges. Alessandro Valentino, product manager at VanEck, noted that these factors, combined with slower-than-expected global economic growth, suggest that significant price increases are unlikely in the near term.
Market Forecast: Bearish Short-Term Outlook
Given the current market dynamics, including profit-taking, milder weather forecasts, and investment difficulties, the near-term outlook for US natural gas futures appears pessimistic. Prices may continue to come under pressure, with possible declines towards the $2.091 support level as traders remain hesitant to buy at current levels.
