Natural gas briefly topped $3.00/MMBtu on Tuesday before reversing sharply lower to trade near $2.91, as fading cooling demand outweighed strong LNG export needs. A well-supplied US market now sits beneath an international backdrop that renewed Persian Gulf tensions could upend.
Natural gas swung hard this week, spiking above $3.00/MMBtu on Tuesday before sellers took over. The commodity is up roughly 4% over the past month, though still nearly 7% below year-ago levels at its current $2.91 level.
Supply stays comfortable, demand gets complicated
Domestic fundamentals look calm. US inventories sit 5.2% above the five-year seasonal average, while Lower 48 output remains near record highs, both capping the room for a sustained rally. Demand tells a different story, however. LNG feedgas flows to major export facilities climbed to 18.3 bcfd in early September from 17.2 bcfd in August as Texas plants returned from maintenance. Meanwhile, European and Asian buyers are scrambling to rebuild storage ahead of winter amid continued disruptions to Persian Gulf LNG supplies.
Gulf tensions loom over a range-bound market
That geopolitical thread is the real wildcard. Renewed attacks on tankers in the Strait of Hormuz over the weekend pushed European gas prices to their highest level in over three years, with Qatar largely suspending LNG shipments and extending force majeure on cargoes through autumn. As a result, a well-supplied domestic market now sits uneasily beneath an international backdrop that could send prices sharply higher if Gulf tensions escalate further.
Chart breaks trendline at a key Fibonacci level
The technical analysis picture adds another layer. XNG/USD staged a recovery from a bullish RSI divergence in mid-August, printing higher lows on the RSI even as price carved a fresh low near 2.596. That divergence fueled a steady uptrend of higher highs and higher lows, but price has just broken below its ascending trendline, now testing the confluence with the 0.382 retracement near 2.874.
Should buyers reclaim the broken trendline and hold above the 0.382 support, a push back above the 0.5 retracement near 2.960 would open the path toward the 0.618 level near 3.045, a key Fibonacci retracement marker. Conversely, a confirmed break below the 0.382 retracement would expose the 2.650–2.700 intermediate support zone, with a deeper slide risking a full retest of the 2.596 low that anchored the entire August-September rally.
Source: ActionForex
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