Natural gas price tumble as global trade tensions and weak demand pressure markets
Natural gas prices fall in Europe and the U.S. as global trade war reduces industrial demand
European natural gas futures dropped more than 5% on Monday, falling below €35 per megawatt-hour and extending a 10% loss from the previous week. The decline brings prices near their lowest levels since September 2024.
The sell-off is largely attributed to escalating trade tensions and fears of reduced industrial activity, which could lower overall energy demand. Markets reacted negatively after China announced a 34% tariff on all U.S. imports in response to the reciprocal duties levied by the U.S. administration. Concerns have since mounted over a slowdown in global economic activity, especially within energy-intensive sectors.
President Donald Trump attempted to downplay recession risks, stating that a market boom is on the horizon. However, sentiment in the energy sector remains fragile. European traders are also weighing the potential relaxation of the EU’s gas storage targets due to price pressures. Additionally, with Chinese LNG demand expected to stay weak through 2025, more liquefied natural gas shipments could be diverted to Europe, further weighing on prices.
Natural gas price dynamics (February 2025 - April 2025) Source: TradingView.
Technical breakdown in U.S. natural gas futures
In the U.S., natural gas futures slipped to $3.75, closing below the 50-day exponential moving average for the first time since late January. The breakdown signals a loss of momentum and confirms a bearish technical structure, with price action forming a descending triangle on the charts.
Should the $3.75 level fail to hold, prices may test $3.43 and potentially drop to $3.13. Long-term support lies near the 200-day EMA at $3.23. On the upside, resistance is seen at $4.24 and along the descending trendline from the March highs. The Relative Strength Index is hovering just above 40, indicating bearish pressure but not yet oversold conditions.
Unless prices rebound above $3.84 with strong volume, analysts caution that downside risks will continue to dominate near-term price action.
As previously analyzed, broader themes like LNG supply shifts, trade tensions, and weak seasonal demand remain key drivers for the natural gas market. These factors continue to challenge bullish narratives, with structural weakness in prices visible across both European and U.S. benchmarks.
