US Natural Gas Futures Climb, Tracking Crude Oil Rally on Geopolitical Tensions

U.S. natural gas futures rose on Tuesday, recovering from a multi-week low hit in the previous session as a rally in the crude oil market provided upward momentum for the broader energy complex.

Price Movement

The September natural gas futures contract on the New York Mercantile Exchange (NYMEX) settled up 8.6 cents, or 3.2%, at $2.78 per million British thermal units (MMBtu). The move follows a drop on Monday that saw the contract touch its lowest level since August 7, according to Investing.com data.

Market Drivers

The primary catalyst for Tuesday's gains was strength in the oil market, where Brent crude futures climbed above $91 per barrel. The oil price surge was reportedly driven by escalating geopolitical tensions and diminishing prospects for a ceasefire in a conflict involving Iran, stoking fears of prolonged energy supply disruptions.

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Adding to supply concerns, Iranian state media on Tuesday quoted the country's chief negotiator, Muhammad Baqer Qalibaf, as saying the Strait of Hormuz would remain closed until the U.S. complies with the terms of a prior interim agreement.

Context and Outlook

Despite the support from oil prices, the upside for natural gas futures remains limited. The market continues to face significant headwinds from record-high levels of domestic production. Furthermore, forecasts for softening demand are also weighing on sentiment, capping the extent of any price rallies.