Natural Gas Surges Above $3 as Storage Levels Tighten

Natural gas prices have broken above $3.00/MMBtu for the first time this year, trading around $3.04 on September 3. This comes after a solid recovery from the August low of $2.65 and marks a significant shift in the technical balance.

The market is now approaching the $3.05-3.10 zone, with a potential target range of $3.15-3.20 if this area is broken. However, a move back below $3.00 would weaken the picture and bring $2.95-2.92 back into focus.

The key event today will be the EIA storage report for the week ended August 28, which will provide insight into the pace of inventory reduction. A weak build could confirm that the market is entering fall with a tighter balance than expected, while European gas prices remain above €75/MWh and EU storage levels are unusually low.

The medium-term picture remains mixed, with LNG exports expected to average around 16.5 Bcf/d in the third quarter according to the EIA's August outlook. However, restrictions in the Strait of Hormuz and shipping problems have been supporting international prices.