Bullish Outlook for Natural Gas Futures Despite Storage Pressure

September natural gas futures are in a long-term downtrend, but the short-term outlook has taken on a slightly more bullish aspect. Anticipated LNG demand since late April has been helping underpin the market, while seasonal traders remain reluctant to press shorts against the risk of a heat dome.

The storage levels, however, remain the key factor capping gains for natural gas futures. The short-term range is $2.799 to $2.979, with its retracement zone at $2.889 to $2.868 currently being tested. Trader reaction to this zone will determine the near-term direction.

Bullish traders are likely trying to establish a secondary higher bottom inside this zone, while bearish traders aim to resume the downtrend with an assault on the main bottom at $2.799. If support is found and buyers return, the most obvious upside target is the minor top at $2.979.

However, even if this level is taken out, buyers will face several headwinds, including a 50% level at $3.022, a 61.8% level at $3.075, another 50% level at $3.087, and the 50-day moving average at $3.099.