Natural Gas Futures Edge Higher as Key Resistance Levels Come Into Play

Market Overview

Natural gas futures are trading higher on Friday, approaching the week’s high of $2.883, with key resistance levels seen at $2.937 and the 200-day moving average of $2.971. Traders are cautious as the market nears these technical levels, expecting sellers to return if prices fail to break higher. However, any surge in buying could trigger a short-covering rally. On the downside, support is seen at the 50-day moving average of $2.486.

Hurricane Helene’s Disruption and Production Impact

Hurricane Helene, a Category 4 storm that struck Florida, caused significant power outages across the Southeast. Although downgraded to a tropical storm, it continues to disrupt operations, affecting demand. Despite this, U.S. natural gas production has remained steady. Initial data shows dry gas production staying around 100 Bcf/day, with notable increases in Gulf of Mexico output.

Natural Gas Storage Update

• Working gas in storage was 3,492 Bcf as of September 20, an increase of 47 Bcf from the previous week.
• This storage level is 159 Bcf higher than last year and 233 Bcf above the five-year average.
• Traders anticipated a larger build of 52 Bcf.

European LNG Import Challenges

Germany's efforts to increase LNG import capacity have stabilized European markets; however, challenges persist. The state-owned Deutsche Energy Terminal GmbH manages imports, with plans for additional floating storage units. While imports have increased significantly, demand for new capacity remains low, posing risks to stability.

Market Forecast

Given steady production and high storage levels, U.S. natural gas prices may encounter downward pressure in the near term, especially if demand weakens due to Hurricane Helene's effects. Any unexpected supply issues or spikes in LNG exports could instigate a bullish shift. The current outlook is cautiously bearish, focusing on significant resistance and support targets.