Natural Gas Holds $3, 207K Shorts Face Squeeze Risk

European demand for U.S. liquefied natural gas is a wildcard. If Europe cannot secure enough cargoes from Qatar or other sources, it will need to import from the United States, which would push prices higher, Chris said. The absence of Russian pipeline gas leaves the market exposed to any supply disruption in the Middle East. Attacks on LNG infrastructure in Qatar have not occurred recently, but the risk remains, and the overall situation is difficult to model.

Data from the Commodity Futures Trading Commission show a large net short position of 207,000 contracts in natural gas futures, according to a recent analysis. That dynamic could fuel a squeeze if the market breaks above the $3 resistance, as shorts may be forced to cover. The front-month contract has held support near $3, keeping the setup in place.

The $3 level is the key technical hurdle. If it breaks, the $3.30 area becomes the next target, a level that has acted as resistance since the start of the year, Chris noted. Traders are watching weather forecasts for any sign of sustained cold that could drain storage and shift the balance from bearish to neutral or slightly bullish.