Natural Gas News: Market Rallies as LNG Supply Risks Stir Bullish Sentiment

Natural Gas Futures Rebound as Geopolitical Risks and Heatwave Prospects Boost Sentiment

Natural gas futures ended a four-day slide on Friday, with July Nymex contracts rising 2.55% to settle at $3.581. The move was driven by renewed geopolitical risks and weather forecasts suggesting stronger near-term demand. Traders took cues from a rally in European gas prices and mounting concerns over global LNG flows, providing a short-term boost despite lingering supply headwinds.

Will Middle East Tensions Undermine Global LNG Stability?

A 6% jump in European natural gas prices, triggered by Israel’s military strike on Iran, set the tone for Friday’s rally. Markets are increasingly pricing in geopolitical risk, with fears that Iran could threaten LNG shipments through the Strait of Hormuz—where roughly 20% of global LNG trade transits. Israel’s shutdown of the Leviathan gas field, which halted pipeline flows to Egypt, added further support to supply-side concerns.

Can U.S. Heatwaves Drive Short-Term Utility Demand?

Forecasts for widespread above-normal temperatures across the U.S. from June 23–27 offered additional upside. Vaisala projected elevated heat levels that would increase air conditioning load and, by extension, natural gas demand for power generation. While current demand metrics remain subdued, this near-term weather shift could help rebalance the market.

Is Domestic Supply Still Overpowering Consumption?

Production continues to outpace demand. BNEF data showed Lower-48 dry gas output at 105.4 bcf/day (+3.2% y/y), while demand stood at 70.3 bcf/day (-5.2% y/y). LNG feedgas flows increased modestly to 13.8 bcf/day. However, Edison Electric Institute data showed a 2.7% y/y decline in U.S. electricity output for the week ending June 7, tempering the bullish impact from the heat forecast.

What Does the Latest Storage Build Signal?

Thursday’s EIA report leaned bearish. U.S. storage rose by 109 bcf, above both the 108 bcf estimate and the five-year average build of 87 bcf. Inventories sit 5.4% above their five-year seasonal average, even as they remain 9% lower year-over-year. In Europe, storage was 52% full as of June 10, trailing the five-year seasonal average of 62%, pointing to tighter supply abroad.

Market Forecast: Will the 200-Day SMA Act as Resistance or Break Point?

Natural gas is finding support between $3.381 and $3.453, reinforcing that range as a technical base. Friday’s close at $3.581 places the market right beneath the 200-day SMA at $3.576, a pivotal level that has yet to be clearly reclaimed. Reaction to this resistance level will set the tone. A sustained move above it could target the $3.80 region near the 50-day SMA, while rejection keeps prices anchored in the lower $3.40s. Near-term sentiment leans cautiously bullish but is contingent on further confirmation from geopolitical or weather-driven catalysts.

More Information in our Economic Calendar.