Natural Gas News: U.S. Power Surge Fuels Natural Gas Demand, But Prices Face Downside Risk

Natural Gas Futures Slip 1.22%; Bearish Sentiment In Play

During the early US session, Natural Gas futures are trading at $2.60, down 1.22%, as bearish sentiment dominates below the key pivot point of $2.65.

Resistance remains firm at the 50-day EMA of $2.73 and the 200-day EMA of $2.68, reinforcing the downtrend.

A bearish engulfing candle on the 2-hour chart suggests strong downward momentum, with immediate support at $2.58. A break below could see prices testing $2.54 and $2.49.

Impact of Middle East Peace Talks and U.S. Power Surge

Prices dipped due to possible peace talks in the Middle East, which could ease geopolitical tensions and reduce supply fears. However, the decline may be short-lived as U.S. power producers continue to ramp up natural gas-fired generation.

Natural gas has now accounted for 46% of total U.S. power generation since June, pushing demand to record highs despite climate goals to curb fossil fuel use.

U.S. Surge in Natural Gas Generation and Its Impact on Prices

The U.S. remains the leading driver of global natural gas consumption, with gas-fired generation reaching 55.6 million megawatt-hours in the first nine months of 2024, up 5% from 2023.

The country now accounts for 30% of global gas-powered electricity, driven by increased demand from power companies. Despite ambitions to reduce fossil fuel reliance by 2030, power producers show no signs of curbing gas use.

Hurricane Milton’s Impact on Natural Gas Demand

Hurricane Milton, expected to make landfall as a Category 4 storm late Wednesday or early Thursday, poses a serious threat to Florida with severe winds, heavy rainfall, and dangerous storm surges. The storm’s path through the Gulf of Mexico has already disrupted natural gas production, and further demand reductions are expected due to potential power outages and cooler temperatures in affected regions.

The National Hurricane Center (NHC) has issued multiple warnings about the hurricane’s strength as it crosses Florida, likely causing widespread power disruptions that could reduce natural gas demand for electricity generation. Additionally, forecasts of lower overall demand across the U.S., excluding regions like California and the Southwest, have contributed to the market’s bearish sentiment.

Although Florida has increased its reliance on natural gas as it phases out coal plants, supporting long-term demand, the short-term outlook remains bearish. The market could see further declines as Hurricane Milton’s impact on production and consumption unfolds.

Short-Term Market Outlook: Bearish

The short-term market outlook for natural gas remains bearish, with immediate resistance at $2.65, followed by $2.69 and $2.73. Support levels are at $2.58, $2.54, and $2.49. Momentum stays bearish below $2.65.

The outlook for natural gas prices remains bearish unless key resistance levels are breached, despite ongoing demand growth in the U.S.