Natural gas tests $3.00 as LNG demand offsets seasonal pressure

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Natural gas tests $3.00 as LNG demand offsets seasonal pressure

Export growth tightens U.S. balance

A new fundamental argument for buyers is that the U.S. LNG sector is already absorbing much more gas than a year ago. According to EIA data published on September 1, U.S. LNG exports rose 23% y/y in the first half of 2026 and averaged 17.4 Bcf/d, while the agency expects around 17.3 Bcf/d in the second half of the year and 18.7 Bcf/d in the first half of 2027.

At the same time, supply remains very high: June dry gas production reached a record 112.33 Bcf/d, 4.5% above the year-ago level. It is the confrontation between these two trends that is now determining the price: production is preventing a pronounced deficit from forming, but the expansion of the export channel is gradually increasing the volume of gas that must be absorbed by the market.

The storage situation has also become less clearly bearish. The latest EIA report showed an injection of only 15 Bcf for the week ended August 21, bringing inventories to 3.184 Tcf. They are still 167 Bcf, or 5.5%, above the five-year average, but are already 30 Bcf below the year-ago level. South Central was particularly notable, with a withdrawal of 19 Bcf, including 20 Bcf from salt storage.

The next report is due on September 3, and the market will be watching primarily to see whether the surplus relative to the five-year average continues to narrow. At the same time, the EIA’s medium-term outlook remains cautious: the agency expects inventories of around 3.985 Tcf by the end of October, the highest pre-winter level since 2016, and assumes Henry Hub will remain below $3 until around November.

Hormuz disruption strengthens LNG premium

Today, a much more concrete geopolitical factor has been added to the U.S. balance. Against the backdrop of renewed escalation around the Strait of Hormuz, European TTF rose above €75/MWh, near the highest levels since early 2023, while Reuters reports that several LNG cargoes from Qatar and the UAE have already had to be transferred ship-to-ship outside the strait for onward delivery to Asia. Such operations are unusual for LNG and show that the market is reacting not only to threats, but also to actual logistical changes.

However, the current rise still cannot be considered the beginning of a full-scale deficit market. Late-summer heat is gradually fading, while the passage of Tropical Storm Edouard has brought cooler and wetter weather to some regions, temporarily reducing power-sector demand for gas.

That is why the market is now in an unusual balance: seasonal power burn is beginning to weaken, while the LNG component, on the contrary, is receiving additional support from European prices and Middle East risks. As a result, the coming weeks may become a struggle between declining domestic air-conditioning demand and rising export demand.

$3.00 breakout could extend recovery

The return of NATGAS to resistance around $3.00 increases the chances of a breakout and further gains, in which the next bullish target could be resistance around $3.10-3.15, where moderate selling may emerge. As I warned in Natural gas presses toward $3.00 as tighter balance supports recovery, failure by the bulls to break the current resistance could trigger a broader liquidation of long positions and a decline toward at least $2.80.

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