Natural gas remains under pressure as abundant supply outweighs Middle East risks
Natural Gas remains under pressure after breaking below the psychologically important $3.00 area, with the daily chart showing sellers regaining control. Prices have fallen beneath the short, medium, and long-term moving averages, reinforcing the bearish technical structure.
The recent rebound has lost momentum, and unless buyers quickly reclaim the $3.00 level, the market could continue testing lower support zones near $2.75-2.80. At the same time, oversold conditions may encourage intermittent short-covering rallies.
Strong U.S. supply continues to outweigh weather demand
Fundamentals remain mixed but continue to favor the bears. U.S. natural gas inventories remain above the five-year average, supported by record domestic production and steady injections into underground storage. The latest EIA outlook continues to project above-average inventories heading into the winter season, limiting upside potential despite resilient electricity demand during the summer cooling period. Softer weather forecasts across parts of the United States have also reduced expectations for near-term consumption.
Middle East conflict keeps global LNG markets volatile
The war in the Middle East remains a major source of uncertainty for global gas markets. Although U.S. benchmark prices have been relatively insulated by abundant domestic supply, disruptions to LNG flows through the Strait of Hormuz and damage to regional export infrastructure continue to tighten the global market. Europe faces a more challenging storage refill season, while Asian buyers remain active in securing LNG cargoes. These geopolitical risks could periodically support natural gas prices if supply disruptions intensify.
Downside risks remain dominant
The broader trend continues to favor sellers, with the chart indicating that recent attempts to stabilize have failed to generate a sustained recovery. A decisive move back above the $3.00 region, as I warned in Natural gas stabilizes near key support as storage surplus caps recovery, would be needed to improve the short-term outlook. Until then, rallies are likely to attract fresh selling interest, while traders continue monitoring U.S. storage data, weather forecasts, LNG export demand, and developments in the U.S.-Iran conflict for the next major catalyst.
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