Natural gas price analysis: US pressures the EU ahead of supply glut

Natural Gas prices in the US remain under selling pressure amid the persistent concerns over supply/demand imbalance at the domestic and global levels. The latest EIA inventory report added to oversupply concerns as soon as next year. Notably, the US is expected to find its way around the supply glut by increasing its exports to the EU as the region works on cutting off Russian LNG.  

 Henry Hub natural gas futures recorded their second weekly loss after dropping below the crucial zone of $3.00 per MMBtu. At the time of writing, it was trading at $2.88. 

US targets EU market ahead of natural gas supply glut

US natural gas prices edged lower on Friday as the market digested the larger-than-expected inventory build. According to EIA’s weekly report, the stockpiles rose by 90 bcf in the week that ended on 12th September. This is higher than the forecast surge of 81 bcf and five-year average for this time period at +74 bcf. Forecasts for cooler weather in late September further weighed on demand optimism.

Meanwhile, the European Union is expected to speed up its plans to eliminate liquified natural gas imports from Russia. This comes just a few days after President Trump called on the region to do more at cutting its energy trade ties with Moscow.

Through the European Commission, the bloc is set to propose fresh sanctions that include phasing out Russian LNG imports earlier than the initial timeline of the end of 2027. It is also considering amending the RePowerEU plan to end its reliance on Russian energy “sooner rather than later”. While implementation of RePowerEU measures would be permanent, the proposed sanctions can be lifted. 

In 2024, Russia accounted for 19% of the EU's LNG shipments. However, the Russia-Ukraine war yielded a significant decline in Russian gas flows to Europe.

Notably, the US will be a key beneficiary of this trade disruption. Indeed, the world’s largest natural gas producer has not been shy to highlight its interest in ramping up its LNG shipments to Europe. In recent years, the EU has imported about 50 billion cubic meters of US LNG annually. Under the recent EU-US trade deal, the EU pledged to buy US LNG worth $750 billion over the next 3 years. 

Natural gas price technical outlook

Natural gas price chart | Source: TradingView

On Friday, the Henry Hub benchmark for US natural gas price extended losses from the previous two sessions; reversing the gains made earlier in the week. The asset ended the week below the support level of $2.90 per MMBtu as sellers maintain control of the market.

Indeed, the prices are now below the 25 and 50-day EMAs, indicating that further losses are likely in the ensuing sessions. To support this bearish thesis, the short-term MA has remained below the medium-term for several months now as the death-cross pattern stays in place. However, its RSI of 43 points to subtle changes at least in the short term.

In the near term, the bulls will be striving to defend the support at $2.85 as the foundation of getting the asset back above the 25-day EMA at $3.00. As such, the range between $2.85 and $3.03 will be worth watching in the coming week. 

A further pullback would activate the lower support zone of $2.80. On the flip side, a rebound will likely be capped at $3.15. Natural Gas prices in the US remain under selling pressure amid the persistent concerns over supply/demand imbalance at the domestic and global levels. The latest EIA inventory report added to oversupply concerns as soon as next year. Notably, the US is expected to find its way around the supply glut by increasing its exports to the EU as the region works on cutting off Russian LNG.  

 Henry Hub natural gas futures recorded their second weekly loss after dropping below the crucial zone of $3.00 per MMBtu. At the time of writing, it was trading at $2.88. 

US targets EU market ahead of natural gas supply glut

US natural gas prices edged lower on Friday as the market digested the larger-than-expected inventory build. According to EIA’s weekly report, the stockpiles rose by 90 bcf in the week that ended on 12th September. This is higher than the forecast surge of 81 bcf and five-year average for this time period at +74 bcf. Forecasts for cooler weather in late September further weighed on demand optimism.

Meanwhile, the European Union is expected to speed up its plans to eliminate liquified natural gas imports from Russia. This comes just a few days after President Trump called on the region to do more at cutting its energy trade ties with Moscow.

Through the European Commission, the bloc is set to propose fresh sanctions that include phasing out Russian LNG imports earlier than the initial timeline of the end of 2027. It is also considering amending the RePowerEU plan to end its reliance on Russian energy “sooner rather than later”. While implementation of RePowerEU measures would be permanent, the proposed sanctions can be lifted. 

In 2024, Russia accounted for 19% of the EU's LNG shipments. However, the Russia-Ukraine war yielded a significant decline in Russian gas flows to Europe.

Notably, the US will be a key beneficiary of this trade disruption. Indeed, the world’s largest natural gas producer has not been shy to highlight its interest in ramping up its LNG shipments to Europe. In recent years, the EU has imported about 50 billion cubic meters of US LNG annually. Under the recent EU-US trade deal, the EU pledged to buy US LNG worth $750 billion over the next 3 years. 

Natural gas price technical outlook

On Friday, the Henry Hub benchmark for US natural gas price extended losses from the previous two sessions; reversing the gains made earlier in the week. The asset ended the week below the support level of $2.90 per MMBtu as sellers maintain control of the market.

Indeed, the prices are now below the 25 and 50-day EMAs, indicating that further losses are likely in the ensuing sessions. To support this bearish thesis, the short-term MA has remained below the medium-term for several months now as the death-cross pattern stays in place. However, its RSI of 43 points to subtle changes at least in the short term.

In the near term, the bulls will be striving to defend the support at $2.85 as the foundation of getting the asset back above the 25-day EMA at $3.00. As such, the range between $2.85 and $3.03 will be worth watching in the coming week. 

A further pullback would activate the lower support zone of $2.80. On the flip side, a rebound will likely be capped at $3.15.