August natural gas futures hit a five-month high as heat forecasts and rising LNG exports challenge the $3.465 resistance level. The breakout setup is built.
August natural gas futures settled at $3.343 Friday, up 3.8% for the week and the highest close in nearly five months. The session marked a third consecutive gain, driven by a heat forecast that finally gave the market a catalyst after weeks of waiting.
Commodity Weather Group called for above-normal temperatures across the Midwest and Northeast from June 30 through July 4. LSEG projects total U.S. gas demand including exports climbing from 102.9 Bcf per day this week to 105.3 Bcf per day next week. The market had been drifting without a narrative. The heat map changed that.
The EIA storage report tried to slow the move. The agency printed 76 Bcf for the week ending June 19 against expectations near 69 Bcf and a five-year average of 75 Bcf. Prices dipped on the number and reversed within twenty minutes. Traders are not trading this week's injection. They are trading what happens to the surplus when sustained heat pushes power burn above normal for two or three consecutive weeks. A 5.7% cushion above the five-year average shrinks fast when demand jumps from 102.9 Bcf per day to 105.3 Bcf per day and LNG is pulling 19 Bcf per day out of the country on top of it.
LNG feedgas deliveries reached approximately 19.1 Bcf per day this week, according to BloombergNEF. Increased deliveries to the Golden Pass LNG project in Texas are adding to the flow as the facility moves closer to full operation. Every Bcf going to an export terminal is a Bcf that does not go into storage. At 19 Bcf per day, the pull on domestic supply is substantial.
Two LNG cargoes are sailing directly from the United States to China right now. Direct shipments had largely disappeared during trade tensions. China is the world's largest LNG importer. Any reopening of that trade route adds structural demand that the market has not been pricing in. If direct U.S.-China LNG flows resume at scale, the demand picture for the second half of the year changes meaningfully.
Qatar's Ras Laffan complex, the world's largest LNG export facility, has suffered damage that officials estimate will take years to fully repair. That facility handles roughly one-fifth of global LNG supply. Any prolonged reduction in those exports tightens the international market and increases competition for U.S. cargoes.
Disruptions to shipping through the Strait of Hormuz continue to create uncertainty for LNG deliveries into Europe and Asia. Europe entered the second half of the year with storage at roughly 47% full against a five-year average of 62% for this time of year. That gap means European buyers are going to compete aggressively for LNG through the summer. U.S. exporters are the most reliable source available. The global pull on U.S. gas is structural and it is not easing.
BloombergNEF estimates Lower-48 dry gas production hit 112.0 Bcf per day, up 3.4% from a year ago. LSEG has June averaging 109.7 Bcf per day, just below the record monthly average from late last year. The EIA raised its 2026 forecast to 111.0 Bcf per day. The bears have every right to point at those numbers and say supply is not tightening.
Baker Hughes reported the rig count rose by one to 122. That is a small uptick from the lows but still well below the 134 rigs operating earlier this year. Production is running on momentum from previous drilling activity. If the rig count stays at these levels, the growth rate eventually flattens. The bears are trading today's production. The bulls are watching the rig trend and seeing a supply story that changes later this year.
August natural gas is pressing against the $3.377 main top. This level is the gateway to the June 1 top at $3.418 and the intermediate 50% level at $3.465. The intermediate mid-point is a potential trigger point for an acceleration to the upside. The next target above that is the 200-day moving average at $3.631 and the long-term 50% level at $3.700.
On the downside, the market is well-supported by a pair of 50% levels at $3.239 and $3.196. August natural gas is also trading on the strong side of the 50-day moving average at $3.181. The support underneath has been tested repeatedly and held every time.
The June 30 to July 4 heat forecast is the near-term catalyst. If it verifies and the hot pattern extends deeper into July, the demand side of this market overwhelms the comfortable storage headline. Next week's injection number will tell you whether the heat is actually translating into tighter balances or whether production is absorbing it.
For a broader view of how these dynamics interact with currency markets, see the forex market analysis page.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.