Pure Fuel Information: Bearish Market Holds Regardless of Brief-Protecting Rally and Climate Enhance…

Thursday’s reversal sparked renewed curiosity in pure fuel after the September contract discovered assist at $2.972. A detailed above this stage confirmed a bullish chart sample, however a commerce beneath it could invalidate the setup and open the door to additional losses towards $2.885. With costs considerably oversold, technicals are favoring a possible short-covering rally towards the $three.340 stage — the 50% retracement of the $three.707 to $2.972 decline.

Are EIA and Manufacturing Numbers Weighing on Sentiment?

Bearish sentiment stays intact on account of basic oversupply. The EIA reported a +48 Bcf construct in storage for the week ending July 25, outpacing expectations of +41 Bcf and much exceeding the five-year common of +24 Bcf. This pushed inventories to six.7% above the five-year common regardless of being three.9% decrease year-over-year.

Including to the strain, US dry fuel manufacturing continues to development increased, averaging 107.eight Bcf/day — up 2.four% y/y. The newest Baker Hughes information confirmed lively fuel rigs climbed by 5 to 122, the very best since late 2023, reinforcing expectations for additional output features. In the meantime, fuel demand was down 7% y/y at 80.5 Bcf/day, whereas LNG feedgas flows fell 2.four% week-on-week to 14.9 Bcf/day.

Will Hotter Mid-August Climate Rescue Bulls?

Climate fashions supply some hope. Atmospheric G2 raised temperature expectations for August 5–9 throughout the Southwest and Texas, pointing to above-average warmth prone to increase cooling demand. Nevertheless, NatGasWeather famous that extra reasonable temperatures throughout a lot of the US by way of subsequent week may cap nationwide demand within the close to time period.

That stated, electrical energy demand stays sturdy. The Edison Electrical Institute reported a notable eight.1% y/y soar in US electrical energy output for the week ended July 26, reflecting excessive air-conditioning hundreds and offering a tailwind for fuel utilization within the energy sector.

Market Forecast: Modestly Bearish with Upside Threat

The short-term outlook leans bearish given robust provide, rising manufacturing, and reasonable upcoming temperatures. Nevertheless, oversold technicals and warmer mid-August forecasts pose upside threat. Bulls will want a agency shut above $three.340 to regain management, whereas a break beneath $2.972 would seemingly reignite promoting strain. Merchants ought to watch climate updates and EIA stock information carefully as key catalysts heading into subsequent week.