US EIA data showed a natural gas storage build of 59B for the week to 10 April. This was above the forecast of 55B.
We recall that the natural gas storage report from April 10, 2025, showed a 59 billion cubic feet injection. This build was larger than the 55 Bcf forecast and signaled a well-supplied market heading into last year’s injection season. The data immediately put downward pressure on prices at the time.
Current Storage Surplus And Price Implications
Looking at today’s market in April 2026, we see a similar, if not more pronounced, bearish backdrop. Current EIA data shows working gas in storage is around 2,330 Bcf, which sits nearly 35% above the five-year average and is significantly higher than where we were this time last year. This considerable surplus suggests prices will likely remain suppressed in the near term.
The primary driver for this supply glut is robust domestic production, particularly associated gas flowing from oil-focused basins like the Permian. This persistent output has overwhelmed demand, which is seasonally low during the spring shoulder season. For now, this dynamic puts a firm ceiling on any potential rallies in the front-month futures contracts.
Therefore, a prudent strategy for the coming weeks involves positioning for continued range-bound trading or further weakness. We should consider selling out-of-the-money call options or implementing bear call spreads to capitalize on high storage levels and low price volatility. These positions benefit from a market that is fundamentally oversupplied for the immediate future.
However, we must watch for the major bullish catalyst on the horizon, which is the expansion of LNG export capacity. With several new terminals slated to begin service later this year, we project a structural increase in demand that could absorb much of the current supply surplus. The timing of these startups will be the critical factor for the market balance later in 2026.
Positioning For A Two Speed Market
This creates a stark contrast between the bearish short-term outlook and a potentially bullish long-term picture for winter contracts. This market structure suggests traders could look at calendar spreads or purchase long-dated call options for the winter 2026-2027 strip. This allows for positioning for an eventual price recovery driven by rising exports, while acknowledging the current weakness.
