Natural Gas Price Action at NG=F
By late Wednesday, the Henry Hub front-month futures (NG=F) settled at $3.75/MMBtu, giving back $0.04 (-0.95%) on the session. Trading oscillated between an intraday low of $3.72 and a peak of $3.78, while open interest stands firm at 38,341 contracts, signaling sustained participation as the market probes key support levels.
Anchored VWAP and Trendline Support
The price’s descent toward the anchored volume-weighted average price (AVWAP) at $2.96 has drawn particular attention. Originating from the 2024 swing low, this AVWAP has held as support on three separate occasions—most recently tested this week with a low of $2.94. Coinciding with a long-term rising trendline, this zone remains the fulcrum for any durable turnaround. Although sellers briefly forced the market beneath the AVWAP on Monday, the prompt rebound underscored its significance.
Immediate Downside Targets
A decisive close below $2.96 would shatter the long-term support matrix and expose the next retracement cluster between $2.86—the June swing low—and $2.79, the 78.6% Fibonacci retracement of the 2024–2025 advance. This zone also aligns with a projected 78.6% extension of the unfolding ABCD corrective pattern, reinforcing its credibility as the next logical floor.
Rising Parallel Channel and Bullish Reversion Potential
Overlaying the chart is a broad, ascending parallel channel drawn from December 2024. The upper boundary has capped rallies four times since then, and yesterday the lower edge was again put to the test. A successful rebound here would complete the channel’s symmetry and set the stage for a potential swing back toward the $4.20–$4.50 region, where the channel’s mid- and upper-band resistances converge.
Seasonal Headwinds and Demand Dynamics
July typically carries a bearish bias as summer cooling demand wanes and storage builds accelerate. This year’s forecasts for milder weather across major U.S. population centers suggest limited incremental demand for power‐generation, while LNG export nominations remain steady near 15 bcf/day. Baker Hughes data shows U.S. gas rig counts at a near two-year high of 122, supporting elevated production that further pressures the spot market.
European Market Balance
Across the Atlantic, TTF front-month contracts have drifted toward €33.80/MWh (≈$11.45/MMBtu), off modestly as European storage sits at 67.6% capacity. Above-average Asian heating demand threatens to draw more LNG cargoes eastward, but strong confidence in Europe’s refill campaign tempers immediate supply concerns.
Technical Outlook and Positioning
From a chart perspective, natural gas must defend the AVWAP zone at $2.96 to maintain any constructive bias. Should buyers regroup here, look for a retest of the near-term resistance cluster at $3.10–$3.15, followed by a more significant hurdle at the $3.45–$3.50 band marked by the 50-day EMA. On the flip side, a breakdown exposes the $2.86–$2.79 trough. Volume patterns show no surge in buying as of yet, underscoring the need for heightened conviction before positioning for anything beyond a tactical, counter-trend bounce.
Positioning Recommendation
Given the convergence of structural support, production tailwinds, and seasonal headwinds, holding off on fresh long exposure until NG=F demonstrates a clear rebound off $2.96 is prudent. Should that level crack, short-term traders may look to test $2.86 and $2.79. Conversely, a resolute reclaim of $3.10 could invite a measured long targeting $3.45, with a stop below $2.96 to contain risk.
