US natural gas price has been hovering around the crucial zone of $3.00 per MMBtu as the bulls lack enough momentum to sustain the rebound that had it hit a 5-week high at the start of the week. The selling pressure is expected to continue as the market is concerned over a possible supply glut as soon as next year. However, an immediate price relief is unlikely especially in Europe with the winter season expected to start with lower inventories.
Natural gas market readies for oversupply
In recent months, the recorded surge in US natural gas production has been a key bearish factor for the prices. The country’s output is near its record high while the active rigs recently hit a 2-year high. As a result, the Energy Information Administration (EIA) has made an upward revision to its 2025 US natural gas production forecast from 106.40 bcf/day in August to 106.63 bcf/day.
Meanwhile, US developers are striving to maximize their gains from the country’s LNG export boom before the global market tips into oversupply from 2026. With several projects nearing completion,liquified natural gas supply is expected to surge by 42% from 2024 to 594 million tonnes per annum by 2030.
In the US, the ongoing LNG expansion projects increased production by 19% in the year’s first half compared to a year earlier. The ongoing constructions across the globe have a capacity of over 174 million metric tonnes of LNG yearly. This includes Qatar’s North Field East project which is set for completion later in 2026.
The developers forecasted booming demand over the coming two decades as Europe sought alternatives to Russian shipments. Besides, China was set to bolster demand as it increasingly shifts from coal. However, Chinese LNG imports have been contracting amid an increase in domestic output and strong flows from Russia.
Even with the expected surge in supply, an immediate price relief is unlikely, especially for consumers in Europe. The region is set to start winter with lower-than-usual inventories. Besides, they will be competing for LNG shipments with Asia.
Natural gas price technical outlook
Natural gas price remains under pressure as concerns over a looming supply glut curb its recent gains. Early on Thursday, it held below $3.00 per MMBtu as the bulls lacked enough momentum to sustain its rebound.
Notably, natural gas price has been on a downtrend since March when it retested 2022 levels. The subsequent lower lows and lower highs signals further selling pressure in the ensuing months.
In the short term, the asset may enter into consolidation mode as investors await a solid catalyst. As seen on its daily chart, its relative strength index (RSI) is at a neutral of 51. Besides, it has found support along the short-term 25-day EMA while hovering below the medium-term 50-day EMA. Based on these technicals as well as the fundamentals, natural gas price will likely trade within a rather tight range in the ensuing sessions.
More specifically, the range between $2.92 and $3.13 will be worth watching. A further pullback may activate the lower support zone of $2.80. On the flipside, a possible rebound may still render July’s level of $3.25 evasive, at least in the short term.
The post Natural gas price analysis as a supply glut looms appeared first on Invezz
