Natural Gas News: Traders Eye Gulf Storm and Key Resistance Levels in Today’s Market

U.S. Natural Gas Futures Rise on Hurricane Fears and Supply Concerns

U.S. natural gas futures advanced for the fourth straight session on Tuesday, as traders speculated on the potential disruption to gas production due to a developing storm in the Gulf of Mexico. Though the hurricane is expected to strengthen and move northward toward Florida, it is projected to avoid key oil and gas production zones in Louisiana, reducing the likelihood of severe disruptions. Despite this, speculative buying continues to support the market.

At 13:16 GMT, Natural Gas futures are trading $2.617, up $0.004 or +0.15%.

Factors Impacting Natural Gas Prices

Traders are focusing on several bullish factors, including a dip in production, increased LNG demand, and heat across the southern U.S. Natural gas production in the Gulf of Mexico is expected to be curtailed, even as the hurricane impacts Florida and Georgia, with power outages possibly offsetting some of the expected demand.

In the weather outlook for September 24-30, NatGasWeather reports that demand is expected to remain low to very low, given milder temperatures across most of the U.S. However, the southern U.S. will continue to experience hotter conditions, potentially keeping demand slightly elevated.

Despite these supportive fundamentals, significant headwinds remain. Production cuts have not been large enough to meaningfully affect supply, and natural gas storage levels remain healthy, reducing the risk of supply shortages. Additionally, mild weather forecasts for much of the country will likely temper demand in the coming week.

Technical Resistance and Potential Reversal

From a technical perspective, natural gas prices are approaching key resistance levels, which could trigger a pullback. The first notable resistance is seen at the long-term 50% retracement level of $2.757, followed by the 200-day moving average at $2.797. Recent price rallies throughout the year have typically been met with renewed shorting pressure near these levels, and this pattern could repeat unless the storm significantly disrupts production.

The expiration of the October natural gas futures contract on Wednesday could add additional volatility to the market. After Monday’s 17.9-cent gain, the contract reversed slightly on Tuesday but remains elevated due to speculative interest.

European Markets Provide Additional Context

While the U.S. market grapples with hurricane-related risks, European natural gas prices have been volatile due to geopolitical risks and supply concerns. European futures rose by 4.9% on Monday, as colder weather forecasts boosted heating demand expectations, and tensions in the Middle East and Ukraine threatened supply lines.

Norway, Europe’s largest gas supplier, is dealing with unplanned outages, adding to supply pressures. At the same time, U.S. LNG export terminal maintenance at Cove Point reduced exports over the weekend, tightening supply further.

Market Forecast: Potential for a Short-Term Pullback

In the short term, natural gas prices may continue to rise if the storm causes greater disruption than currently expected. However, with ample storage levels, low demand forecasts, and resistance near key technical levels, a pullback remains likely unless weather conditions worsen or production cuts escalate. Traders should watch for renewed selling pressure if the hurricane avoids major production zones and cooler temperatures lower demand.