Natural gas tests $3.55 resistance as cold weather fuels a sharp rally

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Natural gas bulls challenge October highs

Weather forecasts trigger widespread short covering

The main catalyst for the acceleration in prices has been changes in U.S. weather forecasts, which now point to a more significant cold spell across the central and eastern states. Additional support came from widespread short covering by speculative funds that had previously expected warm weather and relatively comfortable inventory levels.

On November 9, December Natural Gas futures on NYMEX gained 7.3% to $3.218/MMBtu and continued to rise toward approximately $3.24 today. However, prices for the NATGAS instrument shown on the chart differ from exchange-traded futures, so technical levels must be assessed separately. The structure of speculative positions is particularly important: fund managers have accumulated one of the largest net short positions in recent years, increasing the likelihood of sharp upward moves when new positive catalysts emerge.

Thus, the current rally is driven not only by changes in the fundamental supply-demand balance but also by the forced reduction of bearish positions, which can temporarily amplify price movements far beyond what current demand indicators would suggest.

Middle Eastern LNG shipments show signs of recovery

The situation in the Middle East has seen new developments today that could also affect the outlook for U.S. LNG exports. According to Reuters data published on November 10, the number of loaded LNG tankers passing through the Strait of Hormuz reached 31 in October, compared with 23 in September, the highest monthly figure since the conflict between the U.S. and Iran began.

Of these, 23 vessels carried gas from Qatar's Ras Laffan complex, while eight departed from the Das Island terminal in the UAE. Meanwhile, Kpler data showed that the total number of LNG cargoes shipped increased to 42 from 27 a month earlier. The recovery was particularly notable in Qatar, where October shipments reached 35 cargoes totaling more than 2.7 million tonnes.

However, this remains significantly below the nearly 6.2 million tonnes exported by the country in February. Thus, the gradual recovery in Middle Eastern supplies could somewhat ease pressure on the global gas market, but it has yet to eliminate the fundamental supply constraints. According to an IEA report published on November 3, combined LNG exports from Qatar and the UAE fell by more than 60 billion cubic meters between March and October compared with the same period last year.

If significant transportation restrictions persist, global LNG supply could decline by approximately 3% in 2026. An additional risk comes from low inventories in European gas storage facilities, which were around 72.4% full as of November 8, compared with a five-year average of approximately 89.4%. This increases European consumers' dependence on imported supplies and supports demand for U.S. LNG. However, if the recovery in Qatari exports accelerates and tensions around the Strait of Hormuz continue to ease, global competition for U.S. gas could gradually weaken, limiting further increases in domestic U.S. prices.

Pullbacks may offer opportunities above $3.30

NATGAS has returned to strong resistance around $3.56–3.60, where prices could once again come under selling pressure, although a major decline appears unlikely at this stage. Pullbacks toward $3.45–3.30, as stated in Natural gas approaches $3.35 as lower U.S. output supports prices, could be used as buying opportunities, while a break below the latter level would lead to a decline toward $3.20.

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