Natural gas pulls back from $3.40 as storage cushion limits upside

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LNG demand supports natural gas prices

Storage remains comfortable despite a narrowing surplus

The storage balance does not yet suggest any shortage. In the week ending September 18, U.S. natural gas inventories increased by 53 Bcf to 3.351 Tcf. This is 146 Bcf below last year’s level, but still 95 Bcf, or 2.9%, above the five-year average. More important is the trend itself: the storage surplus relative to normal levels is gradually narrowing, although the EIA expects inventories to reach around 3.969 Tcf by the end of October, approximately 5% above the five-year average.

At the same time, high production continues to offset accelerating export demand, meaning that without a significant change in weather conditions, the market will find it difficult to move quickly into a physical deficit. Stronger support is coming from LNG. Gas flows to U.S. export terminals remain close to historically high levels, at roughly 17.5–18 Bcf/d, removing an increasing amount of supply from the domestic market. The importance of this factor is being reinforced by persistent tensions in the Middle East.

LNG demand supports the market, but export capacity has limits

Although energy flows through the Strait of Hormuz are gradually recovering, regional risks have not disappeared, while the threat of renewed disruptions around the Strait of Hormuz and shipping routes through the Red Sea continues to support a premium in global LNG prices. For U.S. natural gas, this is more of an indirect positive: expensive international gas prices support maximum utilization of U.S. export infrastructure, but exports cannot be increased quickly beyond existing capacity.

In the coming days, weather remains the main counterweight. Late September is a transitional period when summer power-sector demand is already declining while the full heating season has not yet begun. As a result, the combination of mild temperatures, high production, and still-comfortable storage levels limits the potential for an immediate return toward $3.40.

$3.10–3.15 becomes the key support zone

On the other hand, the market remains well above the roughly $3.00 levels seen before the latest move, while rising LNG demand and the shrinking storage surplus make a deeper decline less obvious. As long as the $3.10–3.15 support zone holds, as noted in Natural gas holds bullish structure despite renewed selling pressure, the current weakness looks more like a cooling-off period after the spike, while a move back above $3.25 would bring $3.30 and then the $3.38–3.40 area back into focus.

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