Natural Gas News: Bullish Forecast as Futures Eye Breakout Above $2.482 Resistance

U.S. Natural Gas Futures Climb as Market Eyes Key Resistance

U.S. natural gas futures rose on Monday, extending last week’s gains, driven by technical breakouts and ongoing supply concerns. The October Nymex contract advanced, breaking key resistance levels at $2.436 and $2.482, shifting the trend to the upside.

As traders focus on both bullish and bearish factors, futures are approaching a significant resistance level near $2.757, with additional technical resistance at the 200-day moving average of $2.799. On the downside, support is found between $2.284 and $2.214.

At 13:27 GMT, Natural Gas futures are trading $2.498, up $0.064 or +2.63%.

Weather, Supply Concerns Support Prices

Natural gas prices received a lift from forecasts of lower production and potential storm-related disruptions in the Gulf of Mexico (GOM). Although milder weather across much of the U.S. has dampened near-term cooling demand, the possibility of a tropical cyclone forming in the GOM later this week could create supply disruptions, particularly from offshore production platforms.

The GOM remains critical for natural gas production, and any shut-ins could tighten supply. However, such storms also tend to reduce demand by causing power outages and lowering temperatures.

According to NatGasWeather, demand will remain low over the next seven days due to mild temperatures across most of the U.S. While hotter conditions are expected in the Southwest and Texas, the broader demand outlook remains soft, limiting immediate upward pressure on prices.

Supply Threatened by Drilling Declines

U.S. natural gas production has remained stable, around 100 Bcf/day, but a declining rig count signals potential future supply tightening. The Baker Hughes rig count fell to 96 last week, continuing a trend of reduced drilling activity in response to low prices.

As production faces downward pressure, the market could see tighter conditions heading into the winter season. However, stable LNG exports and the potential for weather-related disruptions are helping to maintain market balance.

Storage Build Keeps Prices in Check

The latest EIA storage report showed a build of 58 Bcf, slightly exceeding market expectations but still below the five-year average of 80 Bcf. Despite this, storage levels remain elevated at 8.6% above their five-year seasonal average, creating a potential cap on further price increases. If storage levels remain high and demand does not materialize, this could keep prices in check in the near term.

Market Forecast: Cautious Optimism with Key Resistance in Sight

Natural gas traders should prepare for volatility as futures approach critical resistance levels. A sustained breakout above $2.482 could trigger a rally toward $2.757, with further upside potential if the 200-day moving average at $2.799 is breached. However, weak weather-driven demand and ample storage may limit gains, especially if prices fall below $2.252. In that scenario, a retest of the $2.021 support level could be imminent.

Given the mixed fundamental outlook—ranging from mild weather and stable supply to potential disruptions in the GOM—natural gas prices are likely to remain range-bound in the short term. Traders should monitor key technical levels and weather patterns closely as the market remains poised for either a bullish breakout or a bearish reversal.