Natural Gas strengthened its upward momentum on August 26 after a confident breakout above resistance in the $2.85-2.90 area, which had repeatedly limited previous attempts to move higher. A move above this zone significantly improves the short-term technical picture and indicates that buyers have managed to regain control after a prolonged period of consolidation.
Storage trend adds support for buyers
The fundamental backdrop is also providing some support for buyers. The latest EIA report showed an inventory build of just 16 Bcf for the week ended August 14, bringing total storage to 3.169 Tcf, compared with the five-year average build of around 29 Bcf. Inventories are already 28 Bcf below last year’s level, although they still remain about 185 Bcf above the five-year average. The next EIA report is due on August 27, and if the injection again comes in noticeably below the seasonal norm, it would provide further confirmation that strong summer demand continues to reduce the surplus.
LNG demand offsets record production
At the same time, record supply remains the main constraint. The EIA still expects U.S. marketed natural gas production to average around 122.5 Bcf/d in 2026, while forecasting an average Henry Hub price of about $2.87/MMBtu in the third quarter. However, the export factor is becoming increasingly important: LNG feedgas has recovered after maintenance, while high prices in Europe and Asia are improving the economics of U.S. exports. This is creating more sustainable support for demand and helps explain why the market was able to break through resistance that had repeatedly capped previous rallies.
Hormuz risks strengthen export outlook
The Middle East remains an additional bullish factor through the global LNG balance. Ongoing restrictions around the Strait of Hormuz are increasing risks to Qatari supplies and intensifying competition between Europe and Asia for available LNG cargoes. As a result, U.S. gas is gaining an additional export advantage.
Therefore, as I warned in the article Natural gas remains range-bound as LNG demand and record supply offset each other, the key question now is no longer the breakout above $2.85-2.90 itself, but whether NATGAS can hold above this zone. If it does, the next targets would be $2.95-3.00 and $3.05; a return below $2.85 would be the first sign of weakening momentum.
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