Is Storage Still a Drag or Already Priced In?

Traders are digesting last week’s bearish-leaning EIA storage report, which showed a 107 Bcf injection—nearly double the five-year average. While the headline figure was heavy, it came in slightly below top-end expectations and followed a stretch of mild weather. As a result, much of the bearish sentiment appears priced in. More importantly, regional inventory deficits remain stark, with the East and Midwest hubs showing year-over-year deficits of 21.7% and 24.4%, respectively. These regional shortfalls help explain why prices have found support despite a seasonally soft backdrop.

Will Weather Continue to Cap Upside Potential?

Mild spring temperatures are expected to dominate U.S. weather patterns from May 1–7, with most regions seeing highs between 60°F and 80°F. Cooling demand will be limited to the Southern tier, where some 90s are forecast, while minor heating demand may emerge in parts of the Midwest. Still, the lack of extreme conditions keeps a lid on residential and commercial gas use, muting any aggressive upward price momentum in the short term.

Export Demand and Supply Risks Offering a Floor?

Despite the soft weather narrative, structural demand factors remain firm. LNG feedgas demand rose 1.5% week-over-week to 15.8 Bcf/d, offering a stable export outlet supported by overseas buyers. U.S. electricity generation is also up 2.1% year-over-year, adding to power sector demand. On the supply side, dry gas production remains elevated at 105.6 Bcf/d, but rig counts have only ticked up slightly, reflecting a cautious approach by producers. Geopolitical noise is also growing louder, with proposed U.S. tariffs on Canadian gas imports introducing fresh supply-side uncertainty—particularly for the Northeast.

Short-Term Outlook: Bullish Setup Tempered by Weather Resistance