Natural Gas News: Can European LNG Demand Push Natural Gas Above Resistance?

European LNG Risk Puts a Floor Under Gas

August Nymex natural gas (NGQ26) settled at $2.918, up 5.3 cents or +1.85%. Friday’s gain came from Europe, not the domestic market. European natural gas prices rallied to a 3.75-month high as the U.S.-Iran conflict raised the risk of prolonged Strait of Hormuz disruptions, and that international risk premium carried U.S. futures higher even though nothing in the domestic data supported the move.

Natural gas finished the week consolidating after the previous week’s steep selloff punished longs chasing summer demand. Friday’s recovery looked more like a reset from that washout than the beginning of fresh directional buying.

Daily August Natural Gas Futures Technical Analysis

August natural gas futures edged higher on Friday after failing to take out the previous day’s low at $2.823. The market ended up posting an inside move that typically indicates investor indecision and impending volatility. In some cases, it suggests a developing transition between bearish to bullish, but I didn’t see a shift in volume to confirm this.

The whole week, the market’s moves were limited as if it were trying to form a support base. That’s possible, but the move was likely more attributed recovery from the steep sell-off the week before that did some serious damage to the speculative longs, hoping for a summer rally.

Now the market may need to reset and lure in fresh buyers or encourage some short-covering to alleviate the current downside pressure. If this can’t be accomplished, prices could continue to drift into previous lows like $2.857 and $2.801. If the latter fails then the selling to extend even further. The lower the futures contract goes, the closer the bullish traders move toward throwing in the towel on this summer’s high demand rally.

On the upside, regaining the former bottom at $2.974 could bring some stability. If this creates enough upside momentum then the short-term retracement level at $3.089 could come into focus. Overcome this, and the 50-day moving average at $3.162 may be viewed as an even higher objective.

Daily Nearby Natural Gas Futures Technical Analysis

Nearby natural gas futures are consolidating like the August futures contract because it is the August contract. So while the price action in July matches, upside and downside objectives are more defined. In this case, overcoming a 50% level at $2.946 and the minor high at $2.968 could launch an extended rally into the price cluster formed by the 50-day moving average at $3.084 and the 50% level at $3.110.

On the downside, the daily chart indicates there is plenty of room to break if buyers start to take out hotter weather and increased demand expectations.

Ras Laffan Damage Boosts U.S. Export Case

The Strait of Hormuz disruption is not the only global supply risk working in favor of U.S. producers. Qatar has reported extensive damage at Ras Laffan Industrial City from attacks earlier this year, with roughly 17% of its LNG export capacity knocked out. Ras Laffan accounts for about one-fifth of global LNG supply and repairs are expected to take three to five years. If European buyers lose access to Middle East cargoes for that long, U.S. LNG is the obvious replacement. A potential closure of the Red Sea route would tighten the picture further by forcing longer shipping routes on whatever Middle East supply is still moving.

LNG feedgas flows held near 18.1 Bcf per day Friday, and the longer this conflict runs, the stronger the case for higher U.S. export volumes. European buyers are already competing harder for U.S. cargoes, and that bid is the only reason Nymex has not rolled over.

Domestic Data Gives Bulls Nothing

Storage is not tight. The latest Energy Information Administration report showed inventories increased 41 Bcf for the week ended July 10. The build came in below the five-year average injection of 45 Bcf, but total storage remains 6.4% above the seasonal five-year average and only 0.9% below year-ago levels.

Production reinforces the overhang. Lower-48 dry gas output was estimated at 112.6 Bcf per day, up 3.6% from a year ago. The EIA also raised its 2026 production forecast to 111.2 Bcf per day from 111.0. Baker Hughes reported the rig count unchanged at 126, below February’s 2.5-year high of 134, but output at current levels shows the existing wells are producing more than enough to keep the market comfortable.

Cooler forecasts across the Southwest and Mid-Atlantic through July 26 took some weather premium out right when summer gas burn should be running at its strongest. Lower-48 demand was estimated at 80.5 Bcf per day, up only 1.2% from last year. Edison Electric Institute data showed power generation rose 7.73% year-over-year in the latest reporting week, but stronger electricity demand has not been enough to tighten supplies with production running this high.

What to Watch

The U.S.-Iran conflict and the global LNG supply squeeze are the only support this market has. Ras Laffan operating at reduced capacity for years and European buyers scrambling for replacement cargoes give U.S. producers a longer export runway. But a comfortable storage surplus and production still climbing means the export bid has to hold or prices have nothing underneath them.

The technical picture shows a market trying to build a base after a steep selloff, but without a volume shift to confirm the turn. Reclaiming the former bottom near $2.974 is the first signal that short-covering has legs. Below that, the longer bulls wait for a catalyst, the closer the market drifts toward levels where the summer rally trade gets abandoned entirely.

More Information in our Economic Calendar.