Natural Gas News: $3.238 Breakout Test in Focus as Weather vs. Supply Dominates Today

Natural Gas Futures Hover Below Key Resistance as Supply and Weather Factors Compete

U.S. natural gas futures edged higher early Tuesday, trading just under the critical 50-day moving average of $3.200, buoyed by near-term weather-driven demand and pipeline issues in Texas. However, with prices yet to convincingly break through the $3.238 pivot, traders remain cautious about a sustained upside move.

At 13:10 GMT, Natural Gas futures are trading $3.110, up $0.020 or +0.65%.

Will Warmer Weather and Pipeline Issues Sustain the Rally?

Natural gas prices extended gains from Monday after warmer temperature forecasts across key U.S. demand regions lifted expectations for late-summer cooling needs. Atmospheric G2 indicated a notable warming trend for September 13–22 across the central and eastern U.S., while NatGasWeather expects hot conditions to persist across the southern half of the country.

Adding support was news of extended repairs at Kinder Morgan’s NGPL compressor station in Liberty County, Texas, curbing flows between Texas and Louisiana. This bottleneck has injected fresh short-term supply concerns into the market. Monday’s price action brought October futures to a one-month high, reflecting both weather-driven demand expectations and the regional supply disruption.

Is Record Production Undermining the Bullish Case?

Despite bullish catalysts, supply-side pressures persist. U.S. dry gas production remains strong, hitting 108.1 Bcf/d on Monday—up 5.9% year-over-year. The EIA also raised its 2025 and 2026 production forecasts last month, reinforcing longer-term supply confidence. This supply backdrop limits the upside potential and may trigger profit-taking on rallies.

Meanwhile, LNG flows to U.S. export terminals edged lower to 15.2 Bcf/d (-0.7% w/w), providing little additional support. And while electricity demand from air conditioning is expected to rise, the Edison Electric Institute reported a nearly 8% year-over-year decline in power output for the week ending August 30, raising questions about the broader strength of cooling-related demand.

What Do Storage and Technical Levels Say About Price Direction?

Last week’s EIA storage build of +55 Bcf landed in line with expectations but remained above the five-year average, keeping inventories 5.6% above seasonal norms.

Traders are watching the technical setup closely—support is seen at the daily pivot of $2.947. A pullback into this level that attracts fresh buyers could form a new higher bottom and suggest more upside ahead. However, failure to hold above this support risks confirming that the recent rally from $2.695 is primarily short-covering rather than a structural move higher.

To trade natural gas with confidence, it’s essential to understand What Drives Natural Gas Prices And How To Find Your Edge as a Trader.

Market Forecast: Sideways to Slightly Bearish Bias Near-Term

While near-term weather and supply issues offer limited upside, strong production and softening LNG flows cap bullish enthusiasm. Unless futures can decisively break above $3.238 and attract follow-through buying, this rally looks vulnerable to retracement.

A retest of $2.947 support could be in play, making the short-term bias sideways to slightly bearish. Traders should remain tactical, favoring pullback entries over chasing breakouts.

More Information in our Economic Calendar.