Natural gas extends breakout as U.S. supply shifts and Japan LNG deals strengthen bullish trend

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Highlights

- Natural gas climbs to $4.65 as a major ascending triangle breakout continues to gain momentum.

- Japan secures new long-term U.S. LNG contracts while U.S. rig data tightens the supply outlook.

- A break above $4.70 opens the path to $5.00 and the next resistance zone at $5.10 to $5.25.

Tokyo Gas’ new 20-year, 1 mtpa supply deal with Venture Global has put long-term U.S. LNG demand back at the center of Asia’s energy strategy, while Baker Hughes data showing a sharp drop in U.S. oil rigs and a rise in gas rigs signals that producers are repositioning ahead of an expected price climb into 2026.

Breakout from ascending triangle shifts natural gas into bullish continuation

The technical structure behind the rally is striking. Natural gas has launched from a textbook ascending triangle base that formed between $2.80 and $3.20, a zone that held firm through months of volatility during the summer and early autumn. Price tested the triangle apex multiple times, found consistent support along the rising trendline, and then broke decisively above resistance in early November.

NG price dynamics (Source: TradingView)

That breakout pierced the descending trendline drawn from the February peak, converting a year-long sequence of lower highs into a clear bullish reversal. Momentum carried the move straight into the $4.60–$4.70 resistance band, which overlaps with the neckline of a previous distribution zone and now marks the final barrier before the psychological $5.00 handle.

The EMAs have fully flipped into bullish formation for the first time since early 2022. The 20-day EMA at $4.34, 50-day EMA at $3.91, 100-day EMA at $3.64, and 200-day EMA at $3.46 are expanding upward in a clean alignment, confirming a trend that is strengthening, not stalling. While price is extended above the short-term moving averages, the tight consolidation below $4.70 suggests digestion rather than exhaustion.

Momentum indicators echo the same tone. The RSI sits at 66, trending higher without producing bearish divergence. Higher lows in the indicator mirror the steady upward slope of price, reinforcing that the market may be preparing for a volatility expansion rather than a corrective pullback.

Japan LNG deals revive structural demand as U.S. production signals shift

The fundamental backdrop is equally supportive. Japan’s renewed push into long-term U.S. LNG has accelerated in 2024, with Tokyo Gas, Mitsui, JERA and Kyushu Electric collectively securing 8.5 mtpa of new multiyear contracts. These agreements reflect both rising energy consumption from AI-driven data centers and Japan’s strategic diversification away from Australian and Russian supplies. Venture Global’s growing footprint as a major U.S. exporter is central to this trend, reinforcing stable demand linked to Henry Hub pricing.

On the supply side, U.S. rig activity is showing signs of structural tightening. Baker Hughes data confirms oil rigs have fallen to their lowest level in four years, while natural gas rigs have increased modestly but remain well below 2021 levels. With the EIA projecting a 58 percent rise in natural gas prices in 2025, producers appear only in the early stages of responding to higher price expectations. Historically, this lag between rising prices and drilling expansion has contributed to major NatGas bull cycles, as supply tightens before production growth normalizes.

This combination — accelerating long-term export demand and cautious domestic drilling response — is helping fuel the speed of the current breakout.

Key levels define the next phase as the market targets $5.00

Near-term levels are clearly defined. Resistance sits at $4.70, the final barrier before the psychological $5.00 round number. A breakout above that level would target $5.10 to $5.25, aligning with the prior swing highs. On the downside, support rests at $4.30, followed by a stronger base at $3.90, where the 50-day EMA meets the top of the former triangle structure. Only a decisive breakdown below $3.60 would threaten the bullish trend.

For now, natural gas trades like a market that has completed its basing phase and is transitioning into a multi-month uptrend. Structural Asian demand, tightening U.S. rig dynamics, and a clean technical breakout leave the path of least resistance pointed higher — with the $5.00 barrier now within reach if momentum persists.

In earlier coverage, we highlighted the tightening supply backdrop and the ascending triangle pattern that was forming a strong base. The breakout above that structure has confirmed the bullish bias, with natural gas now accelerating toward the upper resistance bands flagged in prior updates.

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