Natural Gas News: Expiration-Driven Selling & Low Demand Hit U.S. Gas Futures

U.S. Natural Gas Futures Drop as Expiration Looms and Demand Remains Soft

U.S. natural gas futures declined sharply on Tuesday as the November Nymex contract approached its expiration amid weak weather-driven demand, rising production, and ongoing market pressure from falling oil prices. The futures market, which had been consolidating to align with cash prices, broke through Monday’s low, putting the October 21 low of $2.764 in focus as a potential support level. If this level does not hold, traders should prepare for a possible downward acceleration toward September’s key support at $2.585.

Technical Levels Signal Downside Risks

The break of recent lows has increased the probability of further downside in the short term. A technical bounce may occur on the initial test of the $2.764 support level, but if selling pressure persists and breaks this threshold, prices could face a rapid descent toward $2.585. While these downside risks are currently prominent, there are several upside targets should market sentiment reverse. If prices do rebound, key resistance levels include the 50-day moving average at $3.083, a minor top at $3.136, and a short-term pivot level at $3.169.

Weak Seasonal Demand and Higher Production Weigh on Prices

A surge in natural gas production combined with continued weak demand has placed downward pressure on prices. Seasonal factors are contributing to softer demand, with forecasts calling for mild weather across much of the United States in the coming week. According to NatGasWeather, weather systems are expected to keep temperatures in the northern U.S. cool, but the majority of the country will experience mild conditions, reducing heating demand. This lack of weather-driven demand is dampening the likelihood of any substantial price rally.

Global Supply Concerns Ease, Adding to Bearish Sentiment

In Europe, natural gas prices saw declines on Monday, as the initial supply fears following recent Middle Eastern conflicts eased. Supply chains remain largely intact, and significant disruptions to natural gas flows have been avoided despite heightened geopolitical tensions. This global stability has further diminished bullish support for U.S. prices, as European LNG demand, a significant driver of U.S. exports, shows limited volatility.

Market Forecast

Given the current market setup, bearish sentiment is expected to continue in the short term as long as demand remains soft and production levels stay high. A decisive break below the $2.764 support could drive prices lower toward $2.585, while the market’s upside potential is capped by technical resistance levels near $3.10.