Natural Gas Futures Hold $3 as Storage Surplus Narrows

U.S. natural gas futures have stabilized at $3.03 per million British thermal units (MMBtu) after a volatile week. The November NYMEX contract briefly dipped below $3.00 on October 1, hitting an intraday low of $2.912 before rebounding on news of a pipeline outage and cooler weather forecasts. The market is now holding above the key $3.00 level, up 4.0% over the past month but down 9.7% from a year ago.

The market faces mixed fundamentals. Storage levels remain elevated, with inventories at 3,415 billion cubic feet (Bcf) as of September 25, 79 Bcf above the five-year average. However, injections have fallen short of the five-year average for seven consecutive weeks, shrinking the surplus from 185 Bcf in late August to an expected 62 Bcf this week. Supply and demand are also softer, with production easing to 112.2 Bcf per day and LNG export flows dropping to 17.0 Bcf per day due to maintenance.

Overseas, European gas trades at €73.12 per megawatt-hour ($24 per MMBtu), and Asian LNG at $25.74, far above the U.S. Henry Hub price. Analysts predict a floor near $2.90 and a slow grind higher into the heating season, with $3.30 as the first objective once cooler weather arrives. The recent slide and Friday's reversal suggest buyers are defending the $3.00 level, with volume and open interest rotating into winter months.

The broader chart shows a series of higher lows since April, with September's low at $2.82 and last week's at $2.912. Each sell-off has ended at a higher level than the one before, indicating underlying support. The market is now waiting for Thursday's storage data and confirmation of cooler forecasts to guide the next move.