Natural Gas News: Analyzing Market Dynamics and Resistance Levels

Navigating Market Volatility Driven by Hurricane Helene

U.S. natural gas futures experienced significant price movements last week due to Hurricane Helene and its impact on production in the Gulf of Mexico (GOM). Futures rose sharply, with the November contract rallying nearly 30 cents as traders speculated on supply disruptions. Despite power outages across the Southeast, the market minimized demand losses, focusing on possible tightening supply ahead of winter. Natural Gas futures settled at $2.902, up $0.288 or +11.02%.

Supply Disruptions Offset by Steady Production

Hurricane Helene knocked out power to four million people, reducing demand temporarily. However, production in the GOM remained stable with a 6.8% increase day-over-day, maintaining U.S. output at nearly 100 Bcf/day. This steady production contained price spikes, although traders are cautious about further disruptions.

Storage Levels Add Resistance to Price Rallies

The latest EIA storage report revealed a build of 47 Bcf, bringing total inventories to 3,492 Bcf. This figure is 159 Bcf above last year and 233 Bcf over the five-year average, limiting future price increases. Nonetheless, the market is sensitive to supply risks as winter demand approaches.

Technical Resistance Halts Further Gains

Natural gas prices encountered significant technical resistance as they neared key levels. Resistance at $2.937 and the 200-day moving average at $2.972 acted as psychological barriers. Traders hesitated to push beyond these points, with short-selling pressure likely to increase if prices do not break higher.

Bearish Outlook with Key Resistance Levels

The natural gas market is expected to face bearish pressure in the coming week, focusing on resistance levels. While production and storage levels are strong, weak demand due to mild weather weighs on prices. Further upside may be capped between $3.206 and $3.387 if demand rises unexpectedly, with downside risks remaining.