Natural Gas News: Strong LNG Demand Lifts Prices – Can the Rally Continue?

Will Natural Gas Futures Hold Key Support or Break Higher?

U.S. natural gas futures are inching higher as buyers defend a critical support level at $3.924. This price point is the last significant floor before the 50-day moving average at $3.732. The key upside target is $4.322, a short-term pivot that could determine the market’s next major move. If sellers push back at this level, a pullback to $3.924 is likely. However, if buyers take control above $4.322, the market could rally toward $4.901.

At 12:07 GMT, Natural Gas is trading $4.174, up $0.122 or +3.01%.

LNG Demand and Production Trends Support Prices

A key driver of bullish sentiment is strong LNG demand. Feed gas deliveries to U.S. export terminals climbed to 15.7 Bcf/day, up 5% week-over-week. Meanwhile, Lower-48 dry gas production dipped to 105 Bcf/day, highlighting a potential supply squeeze.

Adding further support, last week’s EIA storage report showed a larger-than-expected draw of 62 Bcf, well above the five-year average draw of 56 Bcf for this time of year. As of March 7, inventories were down 27% year-over-year and nearly 12% below the seasonal five-year average, reinforcing concerns about tight supplies ahead of the summer cooling season.

Mixed Weather Outlook Keeps Market in Check

Near-term weather forecasts are mixed, limiting immediate upside momentum. The western U.S. will see colder conditions with rain and snow, while much of the country remains warmer than normal through midweek. A shift toward more moderate demand is expected as colder systems sweep across the country by Thursday, potentially boosting heating demand but not significantly altering the overall supply-demand balance.

Looking ahead, Maxar Technologies forecasts a warming trend in the West and Central U.S., with cooler temperatures in the Mid-Atlantic for late March. This mixed pattern could temper volatility unless a stronger cold front develops.

Bullish Factors in the Longer Term

In a longer-term bullish development, the lifting of the Biden administration’s pause on LNG export project approvals in January could provide structural support for prices. A backlog of projects, including a Commonwealth LNG facility in Louisiana, is now under active consideration. Expanding U.S. LNG export capacity would increase global demand for U.S. natural gas, tightening supplies further.

Additionally, U.S. electricity demand remains strong. The Edison Electric Institute reported that electricity output in the Lower-48 states rose 7.8% year-over-year in early March, a positive sign for natural gas consumption from power generators.

Market Outlook: Bullish with Key Resistance at $4.322

Near-term, natural gas prices remain supported by tight storage levels, robust LNG demand, and a potential production slowdown. However, the market faces resistance at $4.322, and failure to break above this level could lead to renewed selling pressure toward $3.924. If buyers clear this hurdle, the next upside target is $4.901. Traders should watch storage trends, production levels, and weather developments for further direction.

More Information in our Economic Calendar.