Natural Gas News: Futures Surge as Gulf Supply Disruptions Shake Market

Natural Gas Futures Surge on Gulf Supply Disruptions

U.S. natural gas futures surged Monday, opening with a gap higher on the daily chart. This move confirms last Monday’s closing price reversal bottom at $2.514 but hasn’t yet shifted the broader trend to the upside. Futures are currently trading above a critical pivot at $2.825, suggesting it could serve as a support level if sustained. The near-term trading range is defined as $3.136 to $2.514, with technical indicators showing that a sustained move above $2.825 could direct prices toward the next key pivot at $3.044.

At 13:31 GMT, Natural Gas Futures are trading $2.875, up $0.206 or +7.72%.

Storm Rafael’s Impact on Gulf Production

The rally is largely attributed to ongoing production shutdowns following Storm Rafael, which has left more than a quarter of Gulf of Mexico oil and about 16% of natural gas production offline. The Bureau of Safety and Environmental Enforcement (BSEE) reported on Sunday that 482,790 barrels of oil and 310 million cubic feet of natural gas output remain shut in. Thirty-seven of the Gulf’s 371 manned platforms, representing about 10% of facilities, were evacuated, along with two drilling vessels that were moved to safer locations.

Major producers Chevron and Shell have begun returning staff to platforms following Rafael’s downgrade to a tropical storm, indicating a gradual resumption of production. Cumulative production losses from the storm stand at 2.07 million barrels of oil and 1.12 billion cubic feet of natural gas, with the Gulf region contributing around 15% of U.S. crude oil production and about 2% of dry natural gas.

Critical Technical Levels to Watch

The market is showing strength above the $2.825 pivot, which could serve as a near-term support level if sustained. The next potential upside target is around the $3.044 pivot, a key technical level that aligns closely with the 50-day moving average at $3.049, forming a resistance cluster. This cluster could serve as a significant barrier, with prices potentially consolidating or pulling back if this resistance holds. Conversely, a drop back below $2.825 would suggest that traders may have overreacted to recent news, opening the door to a pullback within the broader range.

Speculation on Cold Weather Adds to Volatility

Speculation about colder weather could be contributing to price volatility, though there is no confirmation yet from reliable forecasts. Traders are awaiting updated mid-session weather models to assess whether temperatures are expected to drop. Until clearer data is available, the potential impact of colder weather on heating demand remains uncertain, adding an element of unpredictability to natural gas prices.

Short-Term Market Outlook

With supply disruptions from Storm Rafael and possible demand increases from colder weather, the short-term outlook for natural gas futures remains cautiously bullish. A sustained move above $2.825 and any confirmed cooling could lift prices toward the resistance area at $3.044-$3.049. However, if Gulf production rebounds quickly or weather models confirm mild conditions, prices could stabilize or retrace, potentially pointing to a bearish turn.