Natural Gas News: Will the Market Overcome Bearish Pressure and Break Above $2.937?

Hurricane Helene Sparks Volatility in Natural Gas Markets

U.S. natural gas futures experienced significant price movements last week, driven by Hurricane Helene and its impact on production in the Gulf of Mexico (GOM). Futures rose sharply, with the November contract rallying nearly 30 cents last week as traders speculated on potential supply disruptions. Despite power outages across the Southeast, the market minimized demand losses, focusing on possible tightening supply ahead of winter.

Last week, Natural Gas futures settled at $2.902, up $0.288 or +11.02%.

Supply Disruptions Offset by Steady Production

Hurricane Helene, which made landfall in Florida as a Category 4 storm, knocked out power to 4 million people. While this temporarily reduced demand, production in the GOM remained stable. Data showed a 6.8% increase in GOM output day-over-day, with U.S. production holding close to 100 Bcf/day. This steady production helped contain price spikes, though traders remain cautious about further disruptions.

Storage Levels Add Resistance to Price Rallies

The latest Energy Information Administration (EIA) storage report revealed a build of 47 Bcf, bringing total inventories to 3,492 Bcf. This figure is 159 Bcf higher than last year and 233 Bcf above the five-year average, providing ample storage that may limit future price gains. However, the market remains sensitive to potential supply risks, particularly as winter demand approaches.

Technical Resistance Halts Further Gains

Natural gas prices encountered significant technical resistance as they neared key levels. Resistance at $2.937, representing a 50% retracement, and the 200-day moving average at $2.972 acted as psychological barriers. Prices touched a weekly high of $2.932 before pulling back, as traders hesitated to push beyond these points. Short-selling pressure is likely to increase if prices fail to break higher, limiting gains in the near term.

European LNG Market Pressures U.S. Prices

Adding complexity to the U.S. market, European natural gas prices also shifted due to geopolitical risks and supply concerns. Germany’s efforts to expand LNG import capacity have faced hurdles as demand for new infrastructure remains sluggish. Coupled with unplanned outages in Norway, these issues have tightened supply in Europe. However, steady U.S. LNG exports have balanced global supply, preventing extreme volatility.

Bearish Outlook with Key Resistance Levels

The natural gas market is expected to face bearish pressure in the coming week, with a focus on resistance levels. Although production remains stable and storage levels are strong, weak demand due to mild weather across much of the U.S. continues to weigh on prices. Hurricane Helene’s impact on demand from power outages will likely overshadow any short-term supply disruptions.

Prices could struggle to break above resistance at $2.937, with further upside potentially capped between $3.206 and $3.387 if demand unexpectedly rises or supply tightens. Otherwise, downside risks persist.