Natural Gas News: Futures Climb Above 50-Day Moving Average – Is $2.757 Next?

U.S. Natural Gas Futures Edge Higher, Eyeing Key Resistance Levels

U.S. natural gas futures are nearly flat on Tuesday, testing the recent high of $2.407 and moving closer to the main top at $2.482. A breakout above this level could shift the trend to the upside, with the next major target set at $2.757. This rise is backed by a bullish outlook, with prices trading above the 50-day moving average of $2.298, which controls the intermediate trend. A sustained rally could even bring the 200-day moving average of $2.817 into play.

At 12:18 GMT, Natural Gas Futures are trading $2.370, down 0.003 or -0.13%. This is down from an earlier high of $2.414.

The market’s upward momentum is supported by both technical factors and fundamental developments in supply and demand, creating a tight environment for the near term.

Warmer Weather and Tighter Supply Support Prices

Natural gas prices are finding strength from a combination of rising LNG export volumes and lingering heat in the southern U.S., which is expected to extend cooling demand. Over the past weekend, LNG exports rebounded after disruptions caused by former Hurricane Francine, providing additional upward pressure on futures.

Production remains robust at around 100 Bcf/day, but the heat in southern regions, particularly in Texas and the Southwest, continues to support near-term demand. As the nation braces for the winter heating season, energy experts suggest the supply and demand balance may remain fragile, especially in key regions like the Midwest. Storage levels, although higher than historical averages, may not provide enough buffer if colder-than-expected temperatures hit in the coming months.

Early EIA Storage Report Signals Modest Injection

Traders are also focused on the upcoming EIA storage report, which is expected to show a 65 Bcf injection. While storage levels remain high, producers have scaled back drilling activity in key dry gas regions, awaiting a recovery in prices. This pullback, along with the forecasted seasonal price increase heading into 2025, could help stabilize production levels in the longer term.

However, near-term demand is expected to remain subdued. National demand over the next 7-15 days is predicted to be low due to moderate temperatures across much of the U.S., according to NatGasWeather. The northern U.S. is seeing above-normal temperatures, resulting in lower heating degree days (HDDs), while the southern regions, though still experiencing above-average cooling degree days (CDDs), are past peak cooling season demand.

Market Forecast

The current natural gas market presents a mixed outlook. On one hand, warmer weather and high storage levels point to bearish sentiment in the short term. On the other hand, tight supply/demand fundamentals and production cuts suggest potential bullish pressure as winter approaches. In the immediate future, prices may face resistance at the $2.482 level, but a break above this could spark a more sustained rally. Traders should watch for developments in weather patterns and storage data to gauge the next move, with a cautiously bullish bias in the lead-up to the winter heating season.