Inventories vs. seasonal demand: Freedom Broker assesses the outlook for gas prices

Uncertainty in the natural gas market persists: seasonally high demand from power plants is supporting prices, however a significant volume of inventories continues to cap prices, Freedom Broker analysts note. Another factor remains the situation in the Strait of Hormuz, whose development could affect gas prices in either direction.

What is happening in the gas market

Natural gas is used for power generation, heating, and in industry. Its price depends on weather, production and inventory levels, power plant utilization, deliveries to LNG terminals, and the geopolitical situation.

Uncertainty about the trajectory of gas prices remains, Freedom Broker analysts emphasize. In their view, the market is simultaneously receiving positive signals from seasonal consumption while facing pressure from accumulated reserves.

U.S. inventories increased less than usual

For the week ending August 28, U.S. natural gas inventories increased by 30 bcf to 3,214 bcf. The result matched the consensus forecast.

Inventories were 1.5% below last year’s level, but 5.2% above the average of the past five years. Over the same period last year, inventories rose by 50 bcf, while the five-year average increase was 37 bcf. The week before, reserves increased by 15 bcf.

This data proved positive for prices, as weekly storage injections were lower than last year’s and the five-year average. At the same time, the overall level of reserves remains elevated versus the seasonal norm and continues to weigh on the market.

Heat and LNG supported U.S. prices

Over the week, natural gas in the U.S. rose by 3.0% to $3.0 per million British thermal units, reaching the highest level since July 2026. A British thermal unit is a measure of thermal energy used in gas trading. The price increase was driven by higher gas deliveries to LNG terminals and forecasts of increased cooling demand in the U.S. over the next 14 days. Additional support came from increased military activity in the Middle East.

Despite the weekly gain, U.S. gas traded 3.2% below the level of the same period last year and 30.8% below the average of the past five years.

European storage is filled below average

Gas storage facilities in European Union countries were on average 66.9% full as of September 7. A week earlier the figure was 65.1%, and the average over the previous five years was 83.3%. Quotes at the Dutch TTF hub, which serves as one of the main benchmarks for gas prices in Europe, rose by 7.4% over the week to $24.5 per million British thermal units.

Producers’ shares may correct in September

Shares of the largest U.S. gas producers rose by an average of 1.2% over the week. Freedom Broker maintains a positive view of their long-term prospects, but warns of the likelihood of a correction in September. The reason may be a seasonal decline in gas demand in the second half of the month. Until then, elevated fuel consumption by power plants will continue to support the market.

The Strait of Hormuz remains a factor of uncertainty

The situation in the Strait of Hormuz can also affect the dynamics of gas prices. Analysts do not single out one base geopolitical scenario: developments could either support prices or lead to a decline.

Thus, the current picture remains mixed. Seasonal demand, deliveries to LNG terminals, and tensions in the Middle East support gas prices, while high U.S. inventories and a possible decline in consumption in the second half of September limit the upside potential.

Not an individual investment recommendation.