Natural gas breaks above $3.00 as storage and LNG flows tighten outlook
Natural gas is trading around $3.04/MMBtu on September 3, already above the psychological $3.00 level and following a solid recovery from the August low around $2.65. On the 2-hour chart, the price is consistently forming higher lows and remains above the main moving averages.
This is already changing the technical balance: $3.00 now becomes the nearest support, while the market is approaching the $3.05-3.10 zone on the upside. If this area is broken, the next target could be around $3.15-3.20. A move back below $3.00 would weaken the picture and bring $2.95-2.92 back into focus.
Storage pace becomes immediate catalyst
Today’s key event will be the EIA storage report for the week ended August 28. The previous release showed an injection of only 15 Bcf, compared with expectations of 19 Bcf, while total inventories reached 3.184 Tcf. The surplus over the five-year average narrowed to 167 Bcf, and the pace of its further reduction is now more important than the absolute level of inventories.
Over the past two reporting weeks, total injections amounted to only 31 Bcf, so another weak build could confirm that the market is entering the fall with a tighter balance than was expected just a month ago. The report is due today at 10:30 ET.
Europe and Hormuz reshape export demand
At the same time, the medium-term picture remains mixed. In its August outlook, the EIA expected LNG exports in the third quarter to average around 16.5 Bcf/d, while restrictions in the Strait of Hormuz and recent shipping problems have already been supporting international prices.
European gas is now trading above €75/MWh, while EU storage levels remain unusually low for the beginning of fall, at around 63-65%. This increases the incentive for Europe to compete for U.S. LNG cargoes and raises the probability that export demand will remain strong even after the end of the summer cooling season.
Seasonal demand remains main constraint
In this situation, the Middle East is becoming not just an additional price premium, but a factor in the redistribution of global LNG flows. Continued disruptions around Hormuz are complicating supplies from Qatar and increasing the value of U.S. gas as an alternative source.
But Henry Hub also faces a limiting factor: domestic power burn will begin to decline seasonally as temperatures fall, while production remains high. Therefore, the current move above $3 looks better supported fundamentally than previous attempts, but a continuation toward $3.15-3.20, as I warned in Natural gas tests $3.00 as LNG demand offsets seasonal pressure, will require either another weak EIA report or a further strengthening of export demand.
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