Natural gas holds near $3.10 as output climbs and EU storage gains pace
U.S. natural gas futures briefly stabilized near $3.10 per MMBtu on Friday, halting a multi-week decline that saw prices fall to a three-month low earlier in July. The recovery was partially driven by short covering and a smaller-than-expected storage build, with 23 billion cubic feet (bcf) added last week, according to EIA data.
Highlights
- U.S. gas futures hover near $3.10 on short covering and lower-than-expected storage build
- Production in the Lower 48 hits a new record at 107.2 bcfd while LNG flows increase in July
- European gas prices fall below €33 as LNG imports and revised storage deadlines ease pressure
The figure came in at the lower end of market forecasts, offering temporary support after weeks of pressure from high output and softer weather demand. Despite the modest bounce, sentiment remains cautious. Natural gas futures are consolidating above $3.057, with the 50-day EMA at $3.28 and the 100-day EMA at $3.38 both trending lower, reflecting sustained bearish momentum. Immediate resistance is now seen at $3.192, with a potential breakdown below $3.057 exposing downside toward $2.973.
Natural gas price dynamics (Source: TradingView)
Production levels continue to cap upside potential. According to LSEG, average output in the Lower 48 has hit a new monthly record at 107.2 billion cubic feet per day, up from June’s 106.4 bcfd. LNG flows to major U.S. export facilities have also increased to 15.8 bcfd in July, supported by maintenance-related recoveries.
Europe’s gas prices ease as storage builds, imports rise
Meanwhile, European natural gas futures slipped below €33/MWh, their lowest since May. EU inventories have reached 65% capacity, improving steadily toward the 80% target set for November 1. The European Parliament has extended the deadline to meet the 90% target from September to December, easing supply pressures.
Weaker LNG demand from China, down nearly 20% year-on-year in the first half of 2025, has boosted Europe's access to spot cargoes. This has allowed countries like France (73%), Italy (78%), and Germany (58%) to accelerate refilling, though overall storage remains below last year’s levels.
In our earlier coverage, we noted that U.S. gas prices faced stiff headwinds from record output and mild summer forecasts. With the 50- and 100-day EMAs still aligned to the downside, the short-term trend remains bearish unless bulls can reclaim $3.275. A sustained move above this level would be needed to alter the outlook heading into August.
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