On August 29, the U.S. Energy Information Administration (EIA) released its weekly natural gas storage report. The report showed that natural gas inventories in the U.S. increased by 35 billion cubic feet (Bcf) last week, slightly below analysts' expectations of 38 Bcf. The previous week, natural gas inventories rose by the same 35 billion cubic feet.

Current inventory levels are 228 billion cubic feet (Bcf) higher than a year ago and 361 Bcf higher than the five-year average.

Natural gas prices rebounded from session lows following the EIA report. This may provide some support to the natural gas market as this week's increase in natural gas storage was lower than analysts expected.

Currently, natural gas demand is staying high. Weather forecasts indicate that demand is expected to remain strong during the weekend. However, demand is expected to decline next week, which may put pressure on prices.

Overall, oversupply remains a major issue in the natural gas market. The market needs significant positives to drive prices higher on a sustained basis.

On the technical front, natural gas prices have firmed above the $2.00 to $2.05 support level. This support level has been tested several times and has proven its validity. If natural gas prices are able to stabilize above $2.10, it could move towards the next resistance level, the $2.25 to $2.30 range.