Natural gas futures surge as U.S. supply dynamics and European demand shift
Natural gas surges above $3.34, ending multi-week downtrend. Europe faces pressure on steady supply
Natural gas futures rallied sharply on Tuesday, climbing to $3.347 and decisively breaking out of the descending channel that had dominated price action since mid-April. The surge was fueled by a combination of technical breakouts and supportive supply-demand dynamics. Price action sliced through the 50-day EMA at $3.222 and cleared the key resistance zone at $3.316, which now flips into immediate support.
This move marks a potential end to the prolonged bearish trend and opens the path for further gains. Traders are eyeing upside targets at $3.465, $3.556, and $3.665, though the 200 EMA at $3.486 poses a major technical hurdle that needs to be overcome for momentum to sustain. Strong follow-through buying above $3.465 will be critical to confirming a broader trend reversal.
Natural gas price dynamics (March 2025 - April 2025) Source: TradingView.
European gas prices under pressure despite U.S. rally
While U.S. natural gas futures are showing bullish momentum, the European gas market continues to face downside pressure. Benchmark Dutch TTF futures slipped below €32 per megawatt hour, hovering near a nine-month low, as warm weather dampened demand across northwest Europe. Current storage levels remain healthy, with Europe’s gas storage facilities at 38.41% full—lower than last year's 61% but still comfortably positioned heading into the warmer months.
Weather forecasts suggest above-average temperatures will persist, further curbing heating demand and slowing storage refill needs. Stable supply dynamics, particularly from liquefied natural gas (LNG) imports, have also added to the bearish bias in Europe, contrasting with the bullish technical setup unfolding in the U.S. market.
Geopolitical tensions add another layer of complexity
On the geopolitical front, U.S. President Donald Trump’s meeting with Ukrainian President Volodymyr Zelenskiy added a new wrinkle to the broader energy narrative. Trump’s suggestion that Ukraine might consider concessions over Crimea was met with skepticism, and any developments in the Russia-Ukraine conflict could eventually impact European energy security sentiment—although immediate effects on pricing have been muted.
As previously discussed in our natural gas outlook earlier this month, the market was primed for a technical breakout once price reclaimed key EMAs and breached consolidation zones. The latest rally aligns with that projection, but the sustainability of this move will heavily depend.
