Heatwaves across Europe and US support gas price recovery from recent lows

US gas prices started July by hitting their lowest level in over a month. After bathing at 3.3, however, traders began buying the commodity, triggering a rebound. The rally has now reached the 23.6% Fibonacci level (3.5), with a sustained break above this threshold potentially paving the way toward the 38.2% (3.63) and 50% (3.72) levels.

In the US, Reuters reports the long-awaited summer warming has begun, with peak temperatures expected by mid-July. Europe is experiencing particularly acute conditions, with heat waves driving up air conditioning use while gas storage levels remain concerningly low at under 60% capacity, significantly below last year's 75% fill rate for this period. This strong European demand helped global LNG markets post a 1.7% growth in the first half of 2025, despite a 6.4% consumption decline in Asia.

According to LSEG analysts, recent US price weakness was largely attributable to maintenance at several LNG export facilities. June exports fell 5.6% from May levels and nearly 10% below April volumes as plants underwent repairs. With most facilities now back online, export volumes are expected to recover.

StanChart reports European summer gas demand surged 25% year-on-year. As US LNG shipments represent the EU's primary option for significant import growth, export volumes are poised to rise. Meanwhile, the pace of US storage injections shows signs of slowing. Today's weekly EIA storage report could provide additional price support if it confirms these trends.

Short-term technical indicators suggest prices could test the 3.63 and 3.72 levels. Traders holding long positions may consider taking at least partial profits at these marks.

Consider the following trading strategy:

Buy natural gas near the 3.5 level. Take profit 1 – 3.63. Take profit 2 – 3.72. Stop loss – 3.3.