Natural Gas (NG=F) Holds $3.10 as Storage Builds and LNG Policy Fuels Long-Term Bull Case

Natural Gas (NG=F) Struggles as Storage Surplus Builds

October Nymex futures for natural gas (NG=F) hover near $3.10 per MMBtu, weighed down by an unexpectedly large 90 bcf injection into storage for the week ending September 12. This lifted total inventories to 3.421 tcf, now 6.3% above the five-year average, reinforcing bearish sentiment in the short term.

Production Hits Records While Demand Softens

Lower-48 dry gas output is running at 107.6 bcf/day, marking a 6.1% increase year-over-year, while domestic consumption slipped 4.6% to 73.1 bcf/day. LNG feedgas demand is steady at 15.3 bcf/day, but the supply glut continues to cap spot Henry Hub prices near $3.20, with Bank of America revising its Q4 forecast down to $3.00/MMBtu despite maintaining a 2026 target of $4.00.

Technical Forecast Points to Volatility Ahead

The October contract briefly recovered above its 50-day moving average, closing at $3.142 (+1.3%), but momentum faded on cooling late-September weather forecasts. Key resistance holds at $3.20–$3.25, while support sits at $2.88. A breakdown could push prices toward $2.70, last tested in July, while a breakout would target $3.50.

AI and Data Center Growth Create Structural Tailwinds

AI adoption is emerging as a transformative driver. Goldman Sachs projects U.S. power demand rising 2.4% annually through 2030, with AI-related data centers accounting for two-thirds of incremental load. Gas-fired power remains the backbone of this expansion, offering 24/7 reliability. EQT CEO Toby Rice stressed that despite record output, U.S. consumers face a 35% rise in bills over three years, highlighting bottlenecks in transmission and pipeline infrastructure.

Regional Dynamics Highlight Supply-Demand Mismatch

Pennsylvania exemplifies the paradox of abundant supply and high local costs. Nearly 60% of the state’s power comes from natural gas, yet household bills have risen 31% since 2020, six points above the national average. With three-quarters of Pennsylvania’s gas shipped to other states or exported as LNG, regional consumers remain exposed to global pricing pressures despite domestic abundance.

Policy Shifts and LNG Expansion Under Trump

The Biden administration’s LNG export pause ended in early 2025, with Trump accelerating new approvals across Louisiana, Texas, and the Gulf. These expansions could lift LNG capacity sharply but risk pushing U.S. winter heating costs higher. Forecasts see household bills up 7.6% year-on-year to $976, while Midwest homes may pay $698, a 16.4% increase.

Corporate Positioning in a Volatile Market

Major players are restructuring balance sheets for the long cycle. Expand Energy (EXE), born from the Chesapeake–Southwestern merger, now produces 7.2 bcf/day, with a 7.5 bcf/day target by 2026. The company has doubled its debt reduction target to $1 billion for 2025, while paying $0.575 quarterly dividends and offering variable payouts, boosting yields to 3.3%. Midstream firms are also positioning: ONEOK (OKE) offers a 5.7% yield, while Energy Transfer (ET) maintains 7.5%, with a $5.3 billion Transwestern expansion aimed at serving AI-linked demand hubs in Texas and Arizona.

Natural Gas Price Forecast: Hold With Bullish Bias

The near-term natural gas outlook reflects oversupply and mild weather risk, likely capping gains below $3.25. Yet, medium-term fundamentals remain constructive as AI power consumption, LNG exports, and manufacturing reshoring fuel incremental demand. Trading ranges point to $2.88–$3.25 through October, with upside potential to $3.50 if LNG flows accelerate. Given today’s $3.10 pricing, NG=F merits a Hold rating with accumulation on dips below $2.90, positioning for structural upside into 2026 where $4 remains a realistic target.

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