Natural gas tests the $3.00 barrier as LNG demand supports prices

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Natural gas holds near $3.00

Storage remains high but the balance is tightening

On the storage side, the situation is gradually becoming less comfortable for sellers, although the overall volume of gas in storage remains high. For the week ending September 11, U.S. inventories increased by 44 Bcf, from 3.254 Tcf to 3.298 Tcf. This is 122 Bcf below the year-ago level, but 118 Bcf, or around 3.7%, above the five-year average. The EIA still expects inventories to reach around 3.969 Tcf by October 31, which would be roughly 5% above the five-year average. The next report is due on September 24, so the market will be particularly sensitive to any deviation in the actual injection from expectations.

The short-term demand balance remains mixed. Cooler forecasts for the next one to two weeks are reducing expected demand from the power sector after strong summer power burn, while high U.S. production continues to limit upside potential. At the same time, exports remain an important source of support: in mid-September, gas flows to LNG terminals rose to around 19.6 Bcf per day, one of the highest levels since spring.

LNG exports offset strong domestic supply

It is this combination of high domestic supply and steady export demand that is largely keeping Henry Hub around $3 instead of allowing a more pronounced trend to develop.

The Middle East continues to provide an additional risk premium. QatarEnergy said on September 21 that it could resume normal operations within several weeks after the full reopening of the Strait of Hormuz, although damage to two LNG trains at Ras Laffan will take around three years to repair. About 17% of Qatar’s LNG capacity remains unavailable, while the company has effectively ruled out alternative exports via pipelines as economically unfeasible.

$3.00–3.04 remains the key technical ceiling

For U.S. natural gas, this preserves medium-term support through stronger demand for American LNG, although any further normalization of shipping through the Strait of Hormuz would reduce the geopolitical premium. Against this backdrop, the $3.00–3.04 area remains the main technical barrier: a breakout would confirm a move into a new leg higher, while another rejection would keep the range-bound scenario intact.

A loss of support around $2.96–2.94, as I warned in the article Natural gas holds near $3.00 as LNG demand offsets strong U.S. supply, would lead to a decline toward $2.90–2.80, although that move could be bought.

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