Natural Gas News: Can Hot Weather and LNG Flows Drive the Next Leg of the Rally?

Natural Gas Futures Push Higher as Heat Builds and LNG Exports Surge

U.S. natural gas futures climbed again on Tuesday, extending Monday’s breakout move above the $3.362 pivot and putting traders on alert for a test of higher resistance zones.

With hotter weather trends and robust LNG exports pushing demand expectations, traders are eyeing the next technical targets for momentum continuation.

Can Strong LNG Export Growth Sustain Bullish Momentum?

LNG exports are providing firm support for U.S. natural gas prices. Estimated flows to U.S. LNG terminals hit 15.8 Bcf/day on Monday, up 5.8% from the prior week.

That figure could soon move higher as eight Gulf Coast export projects—totaling nearly 99 Mt/y of additional liquefaction capacity—are under construction or nearing completion. Another 94 Mt/y is already operational, making the U.S. the largest LNG exporter globally.

Even as more terminals await final investment decisions, developers are pushing forward, signaling long-term strength for the LNG demand component.

Will Weather-Driven Power Demand Continue to Support Prices?

Hotter U.S. weather forecasts continue to support near-term demand expectations. Atmospheric G2 on Monday projected above-normal temperatures across much of the U.S. through late July, particularly in the southern, central, and eastern regions.

This aligns with current electric grid data, as utility-scale power demand is climbing.

The Edison Electric Institute reported that U.S. electricity output rose 1.0% y/y for the week ending July 5, with output up 2.4% y/y for the trailing 52-week period.

Is the Technical Breakout a Trend Change or Just a Bounce?

While natural gas futures surged to a one-week high on Monday, some analysts remain skeptical about sustained upside. NGI’s Patrick Rau noted that August contracts broke out of a falling channel but still face resistance.

The next immediate target is $3.574, with stronger resistance at $3.730 and a key technical confluence at $3.796–$3.800, formed by the 200- and 50-day moving averages. Traders may view this zone as a potential short setup.

Do Storage and Production Fundamentals Justify Higher Prices?

Recent EIA storage data adds a layer of complexity. Inventories rose 53 Bcf in the latest report—below expectations and in line with the 5-year average. However, storage remains 6.1% above seasonal norms. Production also remains high, with Lower 48 output at 107.2 Bcf/day, up 3.0% y/y, while demand was down 4.8% y/y at 76.7 Bcf/day. This imbalance tempers bullish conviction, especially if heat-driven demand eases.

Market Forecast: Cautiously Bullish in the Short Term

The near-term outlook remains cautiously bullish. Strong LNG exports and hotter forecasts should underpin support above $3.362. However, failure to decisively clear the $3.730–$3.800 resistance cluster may stall the rally. A break above that level would shift momentum firmly higher, but until then, traders should be prepared for profit-taking or short setups on strength.

More Information in our Economic Calendar.