Natural Gas Price Analysis: NG=F Slides Toward $3.00 as Oversupply and Weak Demand Mount

Natural Gas Price Analysis: NG=F Faces Bearish Pressure Amid Weak Demand, Technical Cracks, And Supply Expansion

Natural Gas Faces Technical Breakdown After Mid-June Peak Near $4.11

The natural gas futures contract (NG=F) has reversed sharply from its recent peak of $4.11, shedding over 13% and currently hovering near $3.654. A pattern of lower highs has emerged since that top, confirming a bearish structure under the 200-hour EMA at $3.77, which continues to act as dynamic resistance. Technical weakness became pronounced after NG=F failed to sustain above the 0.5 Fibonacci retracement level at $3.758, with current trading action stalling above $3.675, just near the 0.382 Fib level. A further breakdown beneath $3.641, coinciding with the 50-EMA, could accelerate momentum toward $3.571, and eventually test $3.494, key support last seen in early Q2.

Mild U.S. Weather Cools Demand Outlook, Seasonal Trend Tilts Bearish

Milder-than-normal temperatures across major U.S. population zones have led to diminished expectations for cooling-related demand. Electricity consumption has softened, and heating demand is negligible. As a result, natural gas consumption in the power sector is tracking below seasonal norms. With air conditioning usage not yet in full swing, the market faces a seasonal softness that typically weighs on NG prices through early August. Traders are increasingly focused on the $3.45 support region, where the uptrend line from late Q1 still holds. A break below this threshold could lead to a clean technical flush toward $3.00.

European LNG Import Surge And Storage Build Add Global Oversupply Signals

European natural gas prices retreated in tandem with U.S. benchmarks. The Dutch TTF fell -2.3% to €33.49 per MWh, posting its largest weekly decline in nearly two years, driven by easing geopolitical fears following a cease-fire between Israel and Iran. LNG shipments into Europe remain 41% above the 5-year seasonal average, as per ANZ Research, reflecting aggressive inventory rebuilding. Current European storage is already 58% full, well ahead of historical pace. These figures suggest global supply is ample, removing much of the geopolitical premium previously embedded in prices.

Middle East Risk Premium Erased As Israel-Iran Cease-Fire Holds

The de-escalation in Middle East tensions has eliminated one of the key short-term bullish catalysts for NG=F. Brent crude, which had spiked above $80, retreated to $67.91, and WTI oil fell toward $65.17, reducing the energy complex's overall support. For natural gas, which often benefits from broader commodity inflows during geopolitical shocks, this risk-off environment has introduced downside volatility.

Price Action Triggers Fade Signals, As $3.465 Becomes Critical Line

Monday’s opening at $3.735 quickly gave way to a steep selloff below $3.600, with five failed tests of $3.500 since May suggesting fragile support. A break below $3.465, the bottom of the 20-day Bollinger Band, exposes a decline toward $2.974, last seen in November 2024. Technical indicators are flashing oversold warnings—slow stochastics have entered reversal zones, hinting that bears may soon exhaust short-term selling pressure. However, any rally will first face the 200-day SMA at $3.712, followed by the middle Bollinger band resistance near $3.745.

Government-Set Floor Prices Add Complexity To Domestic Markets

India’s Petroleum Planning & Analysis Cell (PPAC) has increased the administered price mechanism (APM) gas rate to $6.89/mBTU for July, while imposing a ceiling of $6.75/mBTU for state-run ONGC and Oil India. This discrepancy reflects structural limitations in state-subsidized gas pricing even as international prices weaken. These administered rates reduce the responsiveness of certain market segments to global spot prices, further segmenting demand and potentially distorting import behavior across Asia.

NG Futures Struggle To Hold Bullish Trajectory Despite Brief Momentum

Despite briefly rallying above $3.600, natural gas futures lost steam after touching $3.740, the initial bullish target. Sideways consolidation followed, with price now squeezed between $3.610 and $3.830. Stochastic indicators moved above 50, and the price attempted to stabilize above the 55-period moving average, offering temporary support for a bullish thesis. If momentum builds, next resistance levels are marked at $3.830, then $3.950. However, without a decisive break above $3.96, upside remains technically limited.

Ongoing Output Hikes By OPEC+ And LNG Exports Extend Supply Weight

OPEC+ announced a fifth consecutive monthly output hike—+411,000 bpd for August—highlighting the persistent oversupply narrative. U.S. rig counts also signal overcapacity in the shale sector. While oil and gas price trajectories aren’t always synchronized, these production trends indicate that global energy producers are not scaling back, reinforcing a bearish undertone for NG futures.

Volatility Dominates In Henry Hub As Prompt Month Swings Below $3.60

August Nymex Henry Hub futures rallied to $3.750/MMBtu on Friday, reaching the midpoint of the 20-day Bollinger Band, only to reverse and fall back toward $3.600 by Monday’s session. The failure to build on short-term momentum confirms persistent weakness. With spot market prices averaging $3.225, futures contracts appear slightly overvalued unless more upside catalysts emerge.

NG=F Is a Hold With Bearish Skew: Until prices reclaim the $3.96 resistance and reassert a clear uptrend above key moving averages, natural gas remains under downside threat. Seasonal cooling demand is not strong enough to counterbalance global oversupply, and technicals continue to erode. A breakdown below $3.45 opens the path to $3.00 and possibly $2.97. Bulls must wait for confirmation of a durable bottom before reentering. Hold bias with tactical short setups remains the favored stance.

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