Natural gas tests $3.00 again as tight LNG supply supports recovery
Natural gas returned to $3.00/MMBtu on September 14 and is up more than 2%, recovering after the recent decline toward $2.85. On the daily chart, this already looks less like a random intraday rebound and more like an attempt to form a more stable base after the August low around $2.65–2.70.
U.S. storage remains comfortable despite regional tightness
The latest EIA report showed inventories rising by 40 Bcf for the week through September 4 to 3.254 Tcf, while the overall storage level remains high. But regionally, the situation is less comfortable: South Central declined to 1.044 Tcf, while salt storage fell to 227 Bcf, preserving a tighter balance specifically in the storage facilities that are especially important for LNG exports and quickly covering peak demand.
The medium-term U.S. outlook continues to limit upside potential. Back in August, the EIA expected Henry Hub to average around $2.87/MMBtu in Q3 against the backdrop of high production, weaker LNG feedgas due to maintenance, and inventories that are expected to enter the heating season at comfortable levels.
International price gap keeps export demand firm
It is the external market that currently looks much stronger than Henry Hub. Because of restrictions on LNG flows through the Strait of Hormuz, European and Asian prices remain at levels equivalent to around $25/MMBtu, while some deals are taking place even higher. Europe is entering autumn with relatively low inventories, so competition for LNG remains strong.
For U.S. gas, this does not provide an immediate price impulse because export terminals are already operating close to capacity, but it supports a very wide international spread and therefore creates reliable demand for every additional available molecule of U.S. gas. As long as problems around the Strait of Hormuz persist, this factor remains the main fundamental barrier to another deep decline in Henry Hub.
$3.05 becomes key breakout level
On the daily chart, Natural gas is now testing the important $3.00–3.05 area. Consolidation above it would noticeably improve the structure and open the way toward $3.10–3.15 and then $3.20. At the same time, the price is still below the longer-term moving average around $3.15–3.20, so it is too early to speak about a full medium-term trend reversal.
On the downside, the nearest support is $2.90–2.88, while the more important zone remains $2.82–2.80. As long as it holds, the base case looks neutral to positive: high U.S. inventories are limiting the upside, but, as I noted in Natural gas remains under pressure as storage outweighs LNG risks, the LNG deficit outside the U.S. and tensions in the Middle East are noticeably strengthening demand on declines.
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