Natural Gas Futures Surge as Heat and LNG Demand Drive Breakout
Published: July 14, 2025
Author: James Hyerczyk
Overview
U.S. natural gas futures experienced a significant rally, breaking above the $3.362 mark, driven by increased demand due to rising temperatures and stronger liquefied natural gas (LNG) feed gas requirements. This surge indicates a bullish momentum in the market, supported by both technical and fundamental factors.
Weather Model Impact
Recent updates to weather models have heightened expectations for cooling-driven gas demand. The American weather model added 12 cooling degree days (CDDs), while the European model added 2 CDDs. This increase in expected heat has bolstered the bullish outlook for natural gas, particularly as peak summer temperatures are anticipated to drive higher cooling demand.
LNG Demand and Market Dynamics
The demand for LNG feed gas has surged to nearly 17 billion cubic feet per day (Bcf/day), tightening supply forecasts and providing additional support for natural gas prices. The combination of rising export volumes and increased cooling demand is pressuring storage expectations, further strengthening front-month contracts.
Technical Analysis
The breakout above the $3.362 pivot level has established a new support zone, with traders now targeting the next resistance level at $3.574. A successful breach of this level could confirm further bullish control, with additional resistance levels identified at $3.730 (50% long-term retracement), $3.795 (50-day moving average), and $3.800 (200-day moving average).
Downside Risks
On the downside, the $3.362 pivot serves as immediate support, followed by a key bottom at $3.149. The technical bias remains bullish unless prices fall below these levels. However, any bearish revisions in weather forecasts or disruptions in LNG supply could quickly test these support levels.
Market Forecast
With weather models trending towards hotter conditions and LNG demand nearing seasonal highs, natural gas futures are likely to continue their upward trajectory. The recent technical breakout reinforces a bullish short-term outlook, with potential tests of the $3.730 to $3.800 range if the $3.574 resistance is breached. Traders are advised to closely monitor midday weather model updates for confirmation or reversal signals.
Conclusion
The current market dynamics, driven by weather forecasts and LNG demand, suggest a strong bullish sentiment in natural gas futures. Traders should remain vigilant and responsive to market changes as the summer progresses.