Natural Gas News: Futures Slide as Weather Fails to Offset Inventory Glut

U.S. natural gas inventories are more than 7% above the five-year average right now. The Energy Information Administration reported a 103 billion cubic feet build last week, well above expectations and well above the seasonal norm. That is not a number that invites buyers in.

Production is sitting near record highs around 110 billion cubic feet per day. I keep coming back to that number because it doesn’t move. The rig count has been grinding higher for a year and a half and the Energy Information Administration already raised its production forecast on top of that. There is no supply story that favors the bulls here.

The Global Side Is Not Enough

Qatar LNG damage and Strait of Hormuz constraints are tightening international supply and that is a real factor for U.S. export demand over time. Electricity generation trending higher adds something on the demand side too. I’m watching both. The problem is the market is not treating either one as a reason to buy June futures right now. Domestic storage and production are too heavy and every rally is getting sold.

What I’m Watching

Every bounce in June Nymex Natural Gas is a selling opportunity until something changes on production or storage. A cold pattern that runs longer than expected could buy the bulls some time. A meaningful surge in exports could shift the picture. Neither one is showing up yet and until one of them does, this market stays heavy.

More Information in our Economic Calendar.