Natural gas prices stabilize as Europe adjusts storage rules and U.S. demand outlook remains cautious
Gas markets stabilize as traders weigh tariff policy shifts and seasonal demand trends
European and U.S. natural gas markets showed tentative signs of stabilization on Monday following recent sharp declines, with futures in Europe edging toward €34.5/MWh after falling 8% last week. The modest rebound came amid broader optimism tied to the U.S. decision to temporarily exempt some Chinese tech products from tariffs, easing recession fears that have weighed on commodity prices.
In the U.S., natural gas futures hovered near the critical $3.50/MMBtu level, supported by technical resilience and a confluence of key long-term support indicators.
Natural gas price dynamics (March 2025 - April 2025) Source: TradingView.
European storage policy and seasonal shifts weigh on sentiment
Across Europe, mild and windy weather is reducing heating and power demand, while encouraging gas storage injections. European storage levels remain relatively low at just over 35% filled, adding pressure to meet summer targets. In response, EU member states agreed to introduce flexibility to the bloc’s gas storage mandate, allowing countries to fall 10 percentage points short of the 90% requirement in case of difficult market conditions.
Though the easing of U.S. tariffs buoyed short-term sentiment, analysts caution against over-optimism. Goldman Sachs recently revised down its energy demand forecasts, particularly for petrochemical feedstocks, while seasonality is beginning to sap demand for heating fuel. As natural gas is a key input in both heating and electricity, any slowdown in economic activity—especially in the U.S.—could further erode demand.
Technical outlook: natural gas at key inflection point
U.S. natural gas prices are clinging to the $3.50 support zone, which aligns with a major trendline and sits just above the 200-day EMA—a level closely monitored by long-term traders. While the market shows resilience, analysts note that a breakdown below $3.30 could trigger a deeper slide toward $3.00/MMBtu. On the upside, the $3.82 level, marked by the 50-day EMA, is expected to provide strong resistance if prices attempt a short-term rally. Traders remain cautious, watching for signs of exhaustion to “fade the rally” and maintain a bearish bias until a decisive breakout occurs.
As highlighted in earlier coverage, U.S. natural gas continues to exhibit high volatility, and the $3.50 level remains a crucial pivot that could define near-term direction amid global uncertainty and shifting policy dynamics.
