Surging Heat-Driven Cooling Demand And LNG Export Boom
Natural gas futures extended their rally for a second straight session as record summer heat pushed U.S. power generators to draw more supply for air-conditioning loads. Domestic output topping 106 Bcf/d balanced against elevated cooling demand lifted prompt NG=F contracts above the $3.00 mark. At the same time, LNG feed-gas flows surged as export terminals maximized shipments to capture richer global pricing. Pipeline nominations into Gulf Coast facilities approached capacity, prompting producers to divert extra volumes into LNG trains, underpinning spot values despite ample storage inventories.
Technical Reversal Near $3.00 Triggers Bullish Signal
After probing long-term support around $2.96—the anchored VWAP from 2024 lows—Natural Gas engineered a two-day bullish reversal. The prompt contract cleared Tuesday’s high of $3.04 and Wednesday’s high of $3.08 before peaking at $3.09, confirming a breach of the mid-July downtrend line. The sharp rebound off the $2.94 trough, which coincided with a 50–61.8% Fibonacci retracement of the July selloff, signals short-term exhaustion among sellers. A firm daily close above $3.08 would validate this reversal, setting sights on resistance at the July 29 swing high near $3.19 and completing a weekly hammer pattern indicative of a broader structural shift.
Production High And Storage Pressures
U.S. natural gas supply, climbing past 106 Bcf/d, adds pressure to storage levels even as inventories hover near the five-year seasonal average. Abundant output and subdued Atlantic hurricane risk keep stockpiles well supplied, while market participants await the EIA’s weekly storage report. Analysts expect a modest withdrawal—likely below last year’s 76 Bcf draw—testing whether the market can sustain prices above psychological levels into late summer or fall back into the $2.90s.
Regional Price Spreads And Hub Performances
Differentials across major trading points narrowed amid heightened off-take. Henry Hub rose $0.11 to $3.04, reflecting the prompt contract’s newfound strength. Chicago Citygate added $0.06, climbing to $3.06 as Midwest power burn joined Gulf Coast LNG exports in draining local inventories. Contrastingly, Alberta’s AECO declined $0.175 on persistent pipeline linefill and softer northern demand, underscoring divergent regional fundamentals even as the national benchmark advances.
Storage Forecasts Hint At Bottoming Pattern
Technical indicators point toward a developing base around the $2.90–$3.00 range. The anchored VWAP at $2.96 has held firm, with just one close below it this month. Should the EIA report confirm a lean draw, speculative funds are poised to reinforce long positions ahead of the heating season, tightening supply cushions. Conversely, a muted storage result risks extending consolidation within the $2.90–$3.00 band, pressuring prices back toward seasonal lows.
Given the interplay of heat-driven demand, surging LNG exports, a clear technical reversal, and a pivotal storage print, Natural Gas stands at a critical juncture. The decisive test will be whether bulls can maintain NG=F above $3.08 into and beyond the EIA release.
