Natural gas holds near $3.38 as storage data and Middle East tensions drive range-bound consolidation
Natural gas maintains a positive momentum and is trading near the $3.38 mark, holding within a wide medium-term consolidation. At this stage, a bounce of NATGAS quotes from support around the $3.30 level toward the $3.40 resistance is observed, which is successfully coping with its task for now.
According to the latest U.S. Energy Information Administration (EIA) report, raw material inventories in underground storage increased by 67 billion cubic feet (Bcf) over the week. This figure turned out to be significantly below average market forecasts and noticeably below the 5-year average, resulting in total inventories reaching 3.567 trillion cubic feet (Tcf). Despite current inventories exceeding seasonal norms, they remain below the levels of the same period last year, providing baseline support to quotes.
U.S. production cuts and weather headwinds
An additional factor influencing the supply and demand balance is the contraction of domestic production in the U.S. Production volumes in the Lower 48 states in October decreased on average to 110.8 billion cubic feet per day compared to record August and September figures amid the aftermath of storms and technical disruptions, while shipments to export LNG terminals are held at high marks. At the same time, a restraining influence on buyers is exerted by long-term weather forecasts predicting milder temperature conditions in late October, which temporarily limits domestic heating demand.
Middle East crisis and global LNG competition
Strong tension persists on the global energy market due to the geopolitical crisis in the Middle East and shipping disruptions through key transport arteries, which sharply cut liquefied natural gas supplies from the Persian Gulf. Against this backdrop, European gas prices (TTF) are holding at multi-month highs due to the region's incomplete storage filling, stimulating fierce competition between Asia and Europe for available LNG cargoes and indirectly supporting the export potential of the U.S. market.
Technical outlook and key price levels
The bounce from support around the $3.30 level allows adhering to a positive outlook, but for a return to current highs, bulls still need to overcome resistance in the $3.40–$3.45 area; otherwise, as noted in Natural gas holds below $3.35 as storage builds and mild weather weigh on prices, a more extensive profit-taking on long positions is possible, against which NATGAS quotes could break support and continue declining toward $3.20–$3.10.
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