On August 22, the U.S. Energy Information Administration (EIA) released its latest Weekly Natural Gas Storage Report. The report showed that available natural gas inventories increased by 35 billion cubic feet (Bcf) last week, above analysts' expectations of 27 Bcf.

Current inventory levels are 221 Bcf above the same time last year and 369 Bcf above the average for the same period over the past five years. High inventory levels continue to be one of the main factors in the downward spiral of natural gas prices.

Natural gas prices tested the lows of the day in trading as a result of the EIA report. With the actual data exceeding most forecasts, it is not surprising that the market saw a sell-off in natural gas futures.

Current demand for natural gas remains moderate, but weather forecasts indicate that demand may increase over the weekend, and it remains to be seen if this will provide support for the natural gas market.

From a technical perspective, natural gas prices pulled back to key support levels in the $2.00 to $2.05 range. Currently, the RSI indicator remains at moderate levels and there is still room for downward pressure in the short term. If natural gas prices fall below the $2.00 mark, it could lead to a further downward test of the $1.80 to $1.85 support area.