Natural Gas News: Can Supply/Demand Concerns Push Prices Higher in the Coming Week?

U.S. Natural Gas Market Weekly Recap and Forecast

U.S. natural gas futures ended last week with a slight uptick, marking the third consecutive weekly gain. The market displayed resilience, maintaining support around $2.252 on the weekly chart, a critical pivot point. As traders assessed technical charts, supply-demand fundamentals, and weather forecasts, volatility emerged ahead of key resistance levels.

Last week, natural gas futures settled at $2.434, up $0.129 or +5.60%.

Late-Season Heat Boosts Short-Term Demand

Warmer-than-expected conditions persisted in southern regions, particularly Texas and the Gulf Coast, supporting cooling demand late into the season. This heat is expected to linger into early October, according to NatGasWeather, potentially boosting short-term demand from electricity providers reliant on natural gas​. However, moderate temperatures across the northern U.S. and the West suggest lower heating demand, leading to a mixed overall demand outlook​​.

Storm Threats and Drilling Declines Could Squeeze Supply

On the supply front, production remained robust, hovering around 100 Bcf/day. Despite high output, supply concerns arose from potential disruptions due to tropical storm threats in the Gulf of Mexico. This storm threat, combined with stable LNG exports, has helped maintain a tight market balance​​.

Meanwhile, U.S. natural gas drilling activity continued to slow, with the rig count falling to 96, down by one from the previous week, reflecting an industry response to low prices​. This decline in drilling activity could signal a more supportive environment for prices as supply tightens ahead of winter.

Storage Data: Slight Build Keeps Prices in Check

Thursday’s EIA storage report indicated a build of 58 Bcf, slightly above expectations of 56 Bcf but well below the five-year average of 80 Bcf​. Despite this build, storage levels remain comfortable, standing 8.6% above their five-year seasonal average​. With U.S. inventories elevated, any surprise demand increases or disruptions to supply could spark rapid price movements.

Market Forecast: Key Resistance in Focus

Looking ahead, the market faces a pivotal moment as prices hover near key technical levels. Resistance remains at $2.482, with a breakout above this level potentially triggering a rally toward the longer-term target of $2.757​​. However, weak weather-driven demand and high storage levels suggest bearish sentiment could persist in the short term. If prices break below $2.252, a retest of the $2.021 support level may follow. Given these factors, traders should closely monitor weather forecasts, supply disruptions, and storage data as the natural gas market remains delicately poised.