Natural gas pulls back after breakout as $3.08–3.10 support comes into focus

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Natural gas holds key breakout zone

Storage remains the main domestic constraint

Fundamentally, the market remains divided. The latest EIA report showed a 44 Bcf increase in inventories for the week ending September 11, bringing total stocks to 3.298 Tcf. This is above the year-ago level and roughly 3–4% above the five-year average. The next report is due on September 24, and the market will be watching injection rates particularly closely after the recent decline in weather-driven demand.

The EIA still expects inventories to reach around 3.969 Tcf by October 31, roughly 5% above the five-year norm, supported by strong production in the Permian and Haynesville. This remains the main medium-term factor limiting upside in Henry Hub prices.

Middle East risks keep LNG demand in focus

On the other hand, the market is receiving support from LNG demand. U.S. feedgas is holding around 18 Bcf/d, noticeably above August levels, while the global supply situation has become much tighter because of developments in the Middle East.

Reuters reports that gas market participants are already pricing in a more prolonged shortage, as the war with Iran disrupts LNG exports from the Persian Gulf and forces Europe to compete with Asia for available cargoes. Qatar is particularly important in this context: unlike oil, a large share of Qatari LNG has virtually no fully viable alternative route around the Strait of Hormuz.

At the same time, the UN General Assembly has added not only a geopolitical risk premium but also some hope of de-escalation. On September 23, the U.S. and Iran held indirect contacts through intermediaries in New York for the first time in several months. Tehran had previously said it could reopen Hormuz within seven days if Washington eased military pressure and lifted the blockade on Iranian ports. For now, this is more of a diplomatic opening than a concrete agreement, but it is helping limit further gains in global gas prices after the recent sharp spike.

$3.08–3.10 becomes the key support area

For Henry Hub, this creates an unusual balance: high domestic inventories and record production are working against a sustained rally, while strong LNG demand and the risk of prolonged disruptions in the Persian Gulf continue to support prices.

After breaking above strong resistance around $3.08–3.10, the price now needs to hold above these levels, which, as noted in Natural gas tests the $3.00 barrier as LNG demand supports prices, are acting as support. That would provide a base for another attempt to challenge resistance at $3.20–3.22. A loss of this support, however, could signal a return to the consolidation range in which NATGAS was trading before the breakout.

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