Buying gas with $3.345 target as heat waves and US output cuts continue to gain traction

Natural gas opened at $3.045 today (August 7), with updated US heat forecasts continuing to drive momentum. G2 atmospheric data confirms prolonged extreme heat through late August, which will boost demand for air conditioning. Gas-powered plants, responsible for over 40% of American electricity production, are now increasing their consumption, thereby fuelling this week's price gains. 

Rising liquefied natural gas (LNG) exports are also pushing quotes up, with daily flows to terminals hitting a 16-week high. This follows the restart of Freeport LNG in Texas and record shipments from Venture Global in Louisiana. Meanwhile, US gas production has fallen to a 3-week low, putting pressure on supply.

Traders are closely watching the EIA report, due Thursday, August 7, which is expected to reveal the smallest weekly storage build since April. If this forecast is confirmed, it could widen the supply deficit and push prices higher.

The threat of Atlantic hurricanes (with a 30–60% probability) brings even more uncertainty to the market. Storms could suppress demand if they hit the East Coast, but they might also cause pipeline disruptions, thus supporting prices. In the meantime, European gas inventories remain 8% below the 5-year average due to weak storage injections, though steady Norwegian flows and LNG imports are offsetting shortages for now. The risk of US sanctions targeting buyers of Russian gas also contributes to underlying price instability.

On the daily chart, quotes remain below the 50- and 20-period descending exponential moving averages (EMAs), reinforcing the broader downtrend. Still, the Stochastic Oscillator (%K=48, %D=43) triggered a bullish crossover on August 6, indicating upward momentum. Although the MACD remains in negative territory with its bar chart below zero, the narrowing gap between its signal and main lines suggests the possibility of a near-term reversal.

Here's a trading strategy to consider:

Buy at the current price. Take Profit: $3.345 (the EMA(50) level). Stop Loss: $2.900 (the key psychological level; a breakout at this level will confirm the strength of the downtrend).

This forecast is valid from August 7 to August 14, 2025.