Natural Gas News: Hurricane Milton Threatens to Shake Up Gas Demand – What’s Next?

Volatility Persists as Weather and Supply Factors Drive Price Action

Natural gas prices experienced choppy trading this week, driven by a combination of weather forecasts, supply data, and technical resistance levels. The November Nymex futures contract closed at $2.854, down 1.65% from a weekly high of $3.019​. Despite briefly surpassing the $3.00 mark earlier in the week, prices struggled to maintain gains due to a mix of bullish and bearish factors.

Supply Levels and Technical Resistance

Natural gas futures encountered significant resistance between $2.937 and $3.206, which limited further upward movement. Bullish drivers, such as expectations of tighter supply due to cooler weather and lower-than-average injections into storage, provided some price support, but robust U.S. production—especially from the Permian Basin—kept a lid on gains​​.

The latest U.S. Energy Information Administration (EIA) report showed a smaller-than-expected storage build of 55 Bcf, bringing total inventories to 3,547 Bcf​​. Despite this reduced build, storage remains well above the five-year average, which has helped cap potential price spikes. The market’s ability to break through the $3.00 level remains uncertain, with strong technical resistance slowing further gains.

Weather Developments: Cooling Trends and Hurricane Impact

Weather patterns played a central role this week, supporting some price increases. Cooler temperatures are forecasted for parts of the U.S., which should drive modest demand for heating. However, overall demand remains lower than expected due to mild weather across much of the country​. In southern regions like Texas and California, heat-driven demand persists, but it hasn’t been enough to significantly impact prices.

Additionally, Tropical Storm Milton is forecasted to strengthen into a major hurricane, posing a potential threat to Florida. The storm could cause power outages, potentially lowering demand for natural gas. The area expected to be hit by the storm doesn’t contain major natural gas infrastructure, so production is not expected to be disrupted, making this a bearish factor for demand​.

Technical Challenges: Key Resistance Levels Hold

From a technical standpoint, natural gas prices struggled to break through the significant resistance zone between $2.937 and $3.206​. While the market briefly touched $3.019, it was unable to hold gains above the $3.00 psychological barrier. Traders are closely watching support at $2.825, with the risk of a further decline if this level is breached. If selling pressure intensifies, prices could fall to the next support level at $2.610​​.

Market Forecast: Bearish Near-Term Outlook

The outlook for next week leans bearish due to strong supply and weaker demand expectations. While some price support could come from colder weather, the potential for hurricane-related power outages in Florida may further dampen demand. Given the strong storage levels and resistance to break above $3.00, natural gas prices are likely to remain under pressure. If support at $2.825 is broken, the market could see a sharper decline toward $2.610​​​.

In conclusion, traders should prepare for continued downside risks next week, with mild demand and high supply likely keeping prices subdued.