Natural Gas: Poised for a Explosive Surge or a Crushing Collapse?

Natural gas prices are at a critical juncture, captivating traders and investors as the energy market teeters between a potential breakout and a sharp decline.

As of May 21, 2025, at 08:23 AM EDT, the June 2025 NYMEX natural gas futures contract trades at approximately $3.425 per million British thermal units (MMBtu), following a volatile week driven by shifting demand and technical signals.

This real-time technical analysis reviews the forces shaping the market, exploring whether natural gas is on the verge of an explosive rally or a devastating drop.

Price Action Signals a High-Stakes Battle

There is a tense struggle in the natural gas market. On May 20, 2025, June NYMEX futures surged 10.09% to close at $3.425/MMBtu, fueled by aggressive buying and soaring U.S. demand amid rising temperatures.

Yet, prices have slammed into resistance near $3,600, a formidable barrier that has repeatedly thwarted bullish advances.

Technical indicators present a precarious picture: the 20-day simple moving average, currently at $3.692, stands as a ceiling, and prices are struggling below it, indicating bearish pressure.

The Relative Strength Index (RSI) sits at 45, signaling a neutral stance, while the Moving Average Convergence Divergence (MACD) remains flat, offering no clear direction.

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Critical Levels to Watch in the Showdown

Traders remain vigilant, closely monitoring pivotal price levels that could potentially determine the market's next move. A robust support zone at $3.337 holds firm, with a dangerous drop below $2.851 threatening a deeper correction.

On the upside, resistance at $3,600 stands as a make-or-break level, with $3,780 as the next hurdle. A decisive break above $3,600 could ignite a rally toward $3,850, while a fall below $3,337 might trigger a slide to $3,250 or beyond.

A recent rebound from ascending support near $3.425, accompanied by a Fred Tam reversal candle, indicates a brief period of bullish optimism, yet volatility maintains the risk-reward equilibrium at a precarious level.

Forces Fueling the Market’s Drama

Fundamental factors are intensifying the market’s volatility. In Texas, a blistering heatwave pushed temperatures to 81°F, spiking natural gas demand for air conditioning by 10% to 5.3 billion cubic feet per day (Bcf/d) in the ERCOT region.

This surge lifted spot prices at the Houston Ship Channel to $3.08/MMBtu. Meanwhile, maintenance on the El Paso Natural Gas Line 2000 has choked supply in West Texas, slashing prices at the Waha Hub to a mere $1.05/MMBtu, a staggering $2.25 below the Henry Hub benchmark.

Storage levels, 3% above the five-year average at 2,255 Bcf, could dampen bullish momentum. Globally, East Asia LNG futures climbed 16 cents to $11.46/MMBtu, reflecting robust international demand.

Did You Know? Natural gas futures, traded on the NYMEX, represent 10,000 MMBtu and rank among the top three physical commodities futures contracts worldwide, with growing adoption in South America, Asia, and Europe.

Will the Market Soar or Crash?

The future of natural gas prices remains uncertain. Forecasts of persistent warm weather in the U.S. could fuel demand, potentially propelling prices toward the $3,600 resistance.

However, high storage levels and regional supply bottlenecks, especially in West Texas, threaten to cap gains. Traders must vigilantly monitor the $3.337 support, as a breach could unleash a sharp sell-off.

With global LNG demand surging and U.S. exports set to climb over the next 18 months, the market’s volatility promises high-stakes opportunities for traders.