Natural gas holds above recent lows amid strong demand and geopolitical risks
The natural gas market remains volatile in mid-May, with Henry Hub futures trading near $2.80–2.85 per MMBtu after rebounding sharply from recent lows. Prices continue to find support from expectations of stronger summer electricity demand in the United States, as well as ongoing geopolitical tensions in the Middle East and around the Strait of Hormuz.
Another supportive factor is strong US LNG exports, which continue to prevent the market from falling into a deeper correction.
Weather and LNG remain the key market drivers
Market focus is gradually shifting from the end of the heating season toward summer cooling demand. Analysts note that hot weather across the southern United States could significantly increase gas consumption by power plants, especially given the high share of gas-fired electricity generation. At the same time, LNG exports continue to expand following the launch of new US export capacity, including Golden Pass LNG and the Corpus Christi Stage 3 expansion. This is strengthening structural demand for US natural gas and slowing the pace of storage builds.
Storage levels remain elevated, but the market is starting to reduce oversupply
Despite still-high gas inventories in US storage facilities, the latest EIA data showed a smaller-than-expected increase in stockpiles. This became the first indication that the market may gradually be moving away from oversupply conditions. According to analysts, the next few weeks could remain relatively stable, although the market may shift toward stronger price growth at the beginning of summer if hot weather and robust LNG exports persist.
Technical outlook and short-term forecast
From a technical perspective, NatGas is attempting to break and hold above the $2.80 area, which could signal further recovery toward the $2.90–3.00 range. At the same time, the overall market structure remains mixed due to elevated inventories and risks of weaker seasonal demand in the coming weeks. Immediate support is located near $2.70, while a break below this level could bring renewed selling pressure.
The main market catalysts in the near term, as already highlighted in the article Natural gas remains highly volatile, will remain EIA storage data, weather forecasts, and geopolitical developments related to LNG supply routes and the Middle East.
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